Deductibles for HO Insurance

rocioNovember 5, 2008

My homeowners insurance will increase by 20% next month. I talked to my agent and was told that I could raise my deductible up to $5000 to keep my premium down.

Currently I have $1000 deductible. By raising it to $2500, I save $243 per year. With $5000 deductible, I save $412 per year.

How high should I go?

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lucy

As ;high; as it takes to get to the phone and check out other companies! That sounds like a real scheme they have going to get you to spend more money and end up with a huge deductible. Unless you know for sure that other co's are in the same boat, I wouldn't do it.

    Bookmark   November 6, 2008 at 5:50AM
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western_pa_luann

I don't think it is a 'scheme' at all! And I am NOT in the insurance business....
Higher deductible = lower premiums... it's how insurance works.

You shouldn't be calling then for the small stuff anyways... so raise it as high as you can afford.
Our deductible has been $5000 for about 6 or 7 years now.

    Bookmark   November 6, 2008 at 8:16AM
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Chemocurl zn5b/6a Indiana

I think I would be checking around too, to find the best deal. I recently called my ins agent to add another vehicle to my auto policy, and while I had them on the phone, I casually mentioned that I was going to be looking around to see if I could get some better rates. They offered then to do it for me for both my auto and my homeowners.

Just by upping my deductible from $500 to $1000 there is a savings of $331. I know I probably should have checked into and changed things long ago. It would have saved me some substantial $$.

They also gave quotes for auto that is cheaper with 'more' coverage.

Sue

    Bookmark   November 6, 2008 at 10:08AM
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arizonarose

We change car & auto insurance co.'s every couple of years. We can always get a cheaper rate when we switch. Insurance companies don't feel any loyalty for you just because you've had them for years...they really don't care.

Also, if you insure your cars & home with the same co. you usually get a discount. As far as the deductible...the higher it is the cheaper the rate. Go with what you can afford to shell out if you have a claim.

    Bookmark   November 6, 2008 at 10:24AM
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rocio

Thank you all for your comments.

Lower premium with higher deductible seems attractive although it's a bit scary. I just need to convince myself and my husband.

As for shopping around, I have been lazy about it. I have Home/Auto with Farmers for more than 10 years. Each have different renewal dates, so I thought it would be difficult to switch company. But I will try. Any recommendations?

    Bookmark   November 7, 2008 at 12:12AM
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Chemocurl zn5b/6a Indiana

Does your agent sell anything other than Farmers?

If so, I would just tell him I was going to be checking around for the best possible rates. Maybe then they would do the legwork for you, as mine did for a better rate.
I don't know if what my agent found me was the cheapest that could be found anywhere, but it sure is a lot more reasonable...

Sue

    Bookmark   November 7, 2008 at 8:58AM
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arizonarose

You can switch both even tho they have different renewal dates. The Insurance co. will send you a check for any over payment on the one that's not due.

As far as recommendations, we did an online search first. You can get quotes and then call if you aren't comfortable with doing it online. This time we switched to Progressive, from Hartford. Hartford kept going up every year...we saved quite a bit for the same coverage with progressive.

    Bookmark   November 7, 2008 at 10:03AM
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chisue

We have 10% deductible. Decide how much you can be comfortable paying out should you have a problem. Also be sure you are not over-insuring. How much would it cost to re-build your house to code were it completely destroyed tomorrow?

Your lot (and foundation) will probably still be there! More than half the value of our home is in the land.

    Bookmark   November 7, 2008 at 10:59AM
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rocio

Sue,
My agent is a Farmer's agent. I guess I have to call around myself.

arizonarose,
I get lots of mail from Progressive. Time to look into it.

chisue,
Over-insuring is one of my concerns. Do you tell your insurance company how much it would cost to rebuild?

    Bookmark   November 8, 2008 at 2:21AM
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turnage

I dumped Farmers (home owners) and Geico (auto) last May and took out a joint home/auto policy with Farm Bureau. Saved nearly a $1000 a year on home and $100 every six months on auto. And increased my liability limits on both policies to boot.

""Do you tell your insurance company how much it would cost to rebuild?"" No. It's my understanding the insurance underwriters determine that based on area, type of structure, square footage, etc.

    Bookmark   November 8, 2008 at 4:53AM
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chisue

Get your own estimate of building costs. Since we built in 2001, I called our GC and asked for his estimate of cost to rebuild. It was pretty close to the insurance company's table of costs and finishes.

You should also have photos or a tape of interior and exterior of your home -- every detail of the house and what's in it. Put this in your safe deposit box. You want to be able to prove what was there in cas of loss.

FWIW, we've had State Farm for 30 years.

I need to add this: When we went to 10% deductible I failed to realize that would apply to all losses under the HO policy -- like the non-scheduled jewelry I lost to a burglar. If we'd set a dollar amount deductible, I would have recovered some of the jewelry loss. (Items that were scheduled on Personal Articles policy were covered and I received a check immediately for full value.)

    Bookmark   November 8, 2008 at 7:43AM
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Chemocurl zn5b/6a Indiana

My agent is a Farmer's agent. I guess I have to call around myself.

My agent writes policies for numerous companies. Possibly you could find an agency via the Yellow Pages that also does that.

You might also check the link below. I see they have a telly # if you want to talk to a licensed agent. I saw them in my Yellow Pages.

Sue

Here is a link that might be useful: Insurance.com

    Bookmark   November 8, 2008 at 2:20PM
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rocio

Thank you all for your comments.

This was a good opportunity for me to take time to look at my policies closely.

I started looking at my auto policies today, too. I found a thing I was not aware of, 10% discount for one year term!

    Bookmark   November 10, 2008 at 1:18AM
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spanky67

Rocio, I started to respond to this last week, got interrupted, and forgot all about it.

Deductible savings is a dual edged sword. Sure you can save premium, but at what "real" cost. To put chisue's response another way...how happy would you be if I told you your spouse just called and said you need to give me $2500 this afternoon? Claims don't come with advance warning. It's one thing to think of a deductible in theory and quite another to actually have to write the check.

With my clients I'll break it down to how fast they can make up the deductible difference in premium savings. I've been told by claims that the average client goes 11 yrs between home claims. The savings is obviously nice, I just want them to be absolutely clear what they've signed on for. If I know them well, I may steer them one way or the other, but ultimately it's their choice.

Regarding the dwelling amount on your house insurance, the company sets the amount. Most require you to insure for no less than the amount they tell you. If you think it should be higher, you can certainly increase the coverage...at least I've never seen that request denied. However, you cannot insure for less and still get some form of replacement coverage. When shopping I'd advise getting a price based on your existing companies coverage first. It's the only true way to compare dollars for dollars. Once you see company "A" charges $100 less for the exact same covergage as compnay "B", you can then have them run their estimator to see what they would need to insure for. Most use the same calculator (called a Boeckh calculator).

Regarding shopping your stuff. First, keep all policies together...you'll normally maximize savings that way. Second, don't get hung up on the individual prices of each policy...if you're paying $2500/yr for home and auto, concentrate on that total when you shop. You won't care that some new company is $100 higher on your home when they come back $400 cheaper on the auto...but can only do that with the house discount. Third, don't bite off your nose to spite your face. It is absolutely your perogative to switch companies for any reason. Having said that, a good agent or company relationship does have a value...contrary to what some here seem to think. Real savings (multiple hundreds of dollars) is hard to ignore...and your handcuffed agent will understand that. Switching because you saved $50 will probably bite you in the backside someday (think of it like accepting the lowest renovation bid).

Last thing to keep in mind. Insurance is a contract...think offer and acceptance. When you "sign up" for the insurance, you are offering to purchase the coverage. The company can then chose to accept, reject, or modify your offer. This is the confusing part to most people as to why the original quote can change from the actual price you get from the company. NOTHING you get from any quote is written in stone. Only when you get the policies in the mail can you be assured of the price.

    Bookmark   November 11, 2008 at 2:43PM
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