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Untangling Home Insurance: Do you need a percentage or flat deductible?


By: John Luttrell

When was the last time you took a good look at your homeowner’s insurance policy? Could you even easily access it if you wanted to? Maybe – and if you’re really tied in, you may even know what your deductible is. So maybe it’s time to understand your insurance and get a keen understanding of what your policy is, so you’re fully prepared in the instance you may need to use it, or if you want to re-evaluate your coverage.

What is a Flat Rate Deductible?

Having a flat rate deductible means that if there is any damage to the home, you are required to pay a certain amount of the claim before the insurance company kicks in. Here are some quick facts you should know:
• You can find your property deductible on your policy declaration page.
• A typical deductible is around $1,000 per claim.
• The deductible will apply to any property damage claim you make.
• A flat deductible allows you to budget appropriately, knowing this value will not change as the value of your home fluctuates.

What is a Percentage Deductible?

A percentage deductible means that if you file an insurance claim for your home, you pay a percentage of your home value before insurance steps in. For example, if your percent deductible is 1% on a $350,000 home, your deductible cost is $3,500. Some important things to know:
• You can find your percentage deductible on your policy declaration page.
• Usually, percent deductibles range from .05% to 2.5%
• It’s important to remember that as the value of your home increases, the dollar value of the percent increases.
• It can be difficult to budget for a percentage deductible, which has potential to cause an unpleasant surprise if you have to file a claim.

The best way to decide upon what’s right for you is to discuss your needs with your SFM trusted advisor. Your needs may vary depending on budget, home value or other factors, and we can help you sort through your options.