Tag: deductible

Common Insurance Terms Made Easy

Posted on by butlervetinsurance

Here are some of the most commonly used insurance terms defined for your convenience.

Your insurance is difficult enough to understand without the added confusion of unfamiliar industry jargon.  If you’ve struggled with unfamiliar insurance terms in the past, you’re not alone.  To help you set things straight, here are the definitions of some of the most common insurance terms.

Additional Insured – Any person or party, aside from the policyholder, who is added to the policy so that they will receive coverage under the policy.

Claim – A request by the policyholder for insurance compensation.  For instance, if you got into a car accident, you would file a claim requesting your auto insurance to kick in.

Conditions – The portion(s) of an insurance policy that explains the responsibilities of the insured and the insurance provider.

Deductible – The amount the policyholder agrees to pay before insurance coverage kicks in for an insured loss.  For instance, if you assume a $500 deductible on your homeowners insurance and your home was damaged, you would have to pay this amount before your insurance coverage kicked in.

Endorsement – Also known as a “policy rider,” this is any change made to an existing policy that alters, deletes, or adds coverage.

Exclusion – A provision in a policy that excludes or limits certain coverages.

Named Insured – The person or entity specifically covered by an insurance policy.  This person is also referred to as the policyholder.

Named Perils – Also known as specified perils, these are covered hazards that are specifically listed in an insurance policy.

Premium – The amount of money an insurance provider charges in exchange for providing coverage.

Use these insurance term definitions to help you make more sense of your insurance.  Need more assistance with your insurance?  Don’t hesitate to contact us at Stromsoe Insurance Agency.  Located in Murrieta, California, our dedicated team is ready to assist you with all your coverage needs.

Understanding the Basics of Insurance Deductibles

Posted on by butlervetinsurance

To get the most out of your Homeowners insurance policy, it is important to understand the roles deductibles play. To find the verbiage concerning deductibles, consult the front page of the Homeowners policy. A deductible is the amount deducted from an insured loss. When a damage claim is filed, the deductible is the amount of money a policyholder must pay upfront. It may be a percentage of the policy’s total or a set dollar amount. Larger deductibles are associated with smaller premiums. Deductibles are subtracted from the claim amount. For example, if a person with a $1,000 deductible files a claim for $10,000, that policyholder will receive a check for $9,000. However, if that deductible is calculated using percentages, the amount may differ. With percentages, the variable is calculated from the total claim and then subtracted from the total.

In many areas of the United States, deductibles are increasing. This is especially true in states prone to hurricanes. Property damage deductibles work differently than those for other types of insurance. For example, a deductible applies each time a claim is filed for Auto or Homeowners insurance. However, a deductible applies only once each year for health insurance. There are some exceptions for damage-related insurance products. In some cases, hurricane coverage has a per-season deductible. The following points cover some of the most important deductible information.
Deductibles Do Not Apply to Liability Claims. Although there is no deductible for a liability claim with a Homeowners or Auto policy, there is a deductible for property damage. Deductibles apply to claims made to the comprehensive policy. In Homeowners insurance, deductibles also apply to damaged items inside the insured structure. However, they do not apply if a homeowner is sued or if a medical claim is filed by an injured visitor.

Higher Deductibles May Save Money. One of the easiest ways to cut expenses is to raise deductibles for Homeowners and Auto insurance policies. Increasing an Auto insurance deductible from $200 to $500 reduces collision and comprehensive premium costs up to 30%. Raising the deductible to $1,000 may result in a savings of more than 40%. Remember this is the out-of-pocket amount that must be paid regardless of the amount of the claim.

Flood Insurance Deductibles Vary. Since flooding is not covered in standard Homeowners policies, it is sold by the NFIP and private insurance companies. There are several different choices of deductible amounts for these policies. Keep in mind that some mortgage companies require homeowners to keep their deductibles under a specific dollar amount. Flood coverage for vehicles can be obtained with an optional comprehensive plan.

Various States & Companies Affect Deductible Amounts. Insurance is a state-regulated product, and insurers are required to follow their state’s rules. The laws affect how deductibles are worded in policies and how they are implemented. Since there are a wide range of deductibles found in each state, it is best to compare policies. Keep in mind that doubling the deductible may save more than 20% on the cost of a policy.

Percentage Deductibles Apply to Hurricanes, Hail & Earthquakes. Earthquake deductibles may be much less than 10% or as high as 20% of the structure’s replacement value. Insurance rates are higher in states such as Nevada, Utah and Washington. Consumers in these states may choose higher deductibles to save money. There are special earthquake policies for California residents. To learn more about areas prone to earthquakes, discuss them with one of our agents.

There are two separate types of wind damage deductibles. The first is a hurricane deductible, which applies to wind damage sustained from hurricanes. The second type is a windstorm deductible, which applies to damages sustained from any other type of windstorm. Hurricane deductibles depend on specific triggers. These are usually designated by the National Weather Service, individual states and insurers. The triggers apply when a storm is officially deemed a tropical storm or hurricane. To learn more about how these triggers work, discuss them with us. Some states allow set deductibles. However, communities in high-risk coastal areas may have mandatory percentage deductibles.

We hope this helps keep you safe. If you ever have any questions, please contact the Total Protection Team at 877-994-6787 or visit agency.thebutlerweb.com, we are happy to help. Have a great day!

Policy Deductible Increases: The Safer Way To SAVE Premium Dollars

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Money is still tight for many Americans, meaning most are still looking to save when and where they can. Some people have even turned to their insurance policies as a place to cut costs. Insurance can be expensive, but consumers need to ask themselves where and how they can really save money in this area without jeopardizing the protection offered by their policy coverages.

Two typical places that many insured individuals think they can cut the cost of their premiums are from reducing the dwelling/liability limits on their Homeowners policy and reducing the liability limits on their Auto insurance policy.

In reality, cutting the liability limits on these policies leaves you highly vulnerable to risk and will NOT ultimately save you any money over the long run. Although you might save a few dollars now with such tactics, it really isn’t worth it when you stop to think about just how much you could lose if you were sued after someone was injured in your home.

If you want to decrease your premiums, a much more prudent way to do it is by increasing the deductibles in your auto and/or home policies. A deductible increase from $250 to $500 could save you up to 15% on your Homeowners insurance premiums. You can save 30% or more on your premiums by raising the physical damage deductible on your Auto insurance policy to $500 or $1,000 dollars.

Some consumers get nervous about not having the $500 to cover their newly raised deductible should they need to file a claim. Since the situation doesn’t involve thousands of dollars in difference, it’s likely to be just as difficult for most people to come up with $500 as it would be $250. The only difference will be that the extra premium savings can be saved and set aside to cover the higher deductible from any future claims. In most cases, the additional $250 could be saved in less than 24 months.

If you’re nervous about taking the larger leap to a $1,000 deductible, then you can always take a slow and steady approach. You might increase your deductible to $500 first. You can open a savings account for the premium dollars you’ll save each month from having a slightly higher deductible. Although it might take some time, you can eventually raise your deductible to $1,000 when you have saved $500 to $750 dollars in the account.

Don’t be caught under insured… Unlike lowering limits, deductible raises can save you money without placing you at a greater financial risk.

If you would like to speak with one of our knowledgeable protection coaches about ways you can SAVE on your insurance program, CALL 877-994-6787 TODAY!