Once you understand how homeowners insurance deductible works and the cost you can afford, the next step is to choose the type of your deductibles: dollar-amount and percentage-based. There are many homeowners who think that there is little or no difference between the two types of deductibles and only a small number of homeowners understand that one type is better than the other for their homeowners insurance policy in Florida. This guide will explain the difference between the two types of deductibles and help you choose one.
They are a fixed amount chosen by a policyholder, irrespective of the amount of homeowner’s insurance claim. The top benefit of this type of deductible is that they are a fixed amount and people can easily remember what they are required to pay when they’re filing their claims. The most homeowners insurance policy in Florida have a $500 or $1,000 deductible but there is no limit, for example, the deductible amount can be as high as $100,000 for a $5 million home.
These types of deductibles are based on a percentage of the estimated replacement cost of your home covered under the policy. For example, say your house valued at $350,000, 1 percent deductible means you would cover the cost of $3,500 anytime you file an insurance claim. However, the replacement cost of your covered home can differ each time you buy or renew a policy. As a result the dollar value of your percentage share would also change.
Many Insurance companies in Florida are beginning to move towards a business model using only percentage-based deductibles and planning to phase out dollar amount deductibles. The reason for the change is to encourage homeowners those who have expensive homes to deter abuse of the home insurance policies and to assume more of their financial risk
For example, the wind might damage a small part of a roof, and a policyholder will end up paying only $1,000 and file a claim for an entirely new one that might cost $15,000 to replace.
Filing claims habitually to maintain a home is abusing a policy and consequently, you will end up paying higher premiums. So, before you choose your deductible amount, be aware of the future consequences.
There is no better place than Diverse Insurance Group that caters all your homeowner’s insurance need in Florida. To contact us, please visit www.insurefloridians.com, and our agents are waiting to assist you.