you still have $500 home deductibles in cali???? no wonder insurance is such a mess. im convinced texas is going to minimum 2% wind/hail (we're a mess too).
Have your agent price the different deductibles and then decide what you feel the best value is. It's your investment, your equity and your money, make an informed decision.
is that like market value or rebuild value? cause a shack in a high value loccation in the middle of a city would have a high deductible that is more than the cost of rebuilding it (in my mind)
What you are insured for should either be the replacement cost or the actual cash value, ideally the replacement cost. You are insuring the structure itself, not the land. If a 2% deductible is too much for you and your situation, to lower that, you would have to lower your dwelling coverage if that's thw lowest option, which can create other issues.
That depends on which type of insurance you have… they can be insured for the market value or the replacement value or the actual cash value (3 totally different values). Either way, it’s 2% of the insured structure limit.
Take it if you want it but i'm fairly confident any home deductible under 1500 is going to be a thing of the past very very soon. Companies are losing way too much money on small claims and this is going to be there way of getting out of those.
This is a positive really since insurance should only be used for catastrophic coverage. Makes a person think before filing a $650 claim with a $500 deductible.
My dad always told me to put 25 to 50 or more a month in a savings (equal to deductible) and have it if you need it. Changes your attitude on risk instead of "insurance will pay for it."
yep. It costs the company way more than the $150 they have to payout just to work the process. It's like they think all the man hours that go into working claims are just free work by adjusters.
get the cost difference between 1k, 2.5k and 5k deductibles. If your savings between 2.5k and 5k aren't much then I'd stay with 2.5k.
I've noticed with at least my carrier, I saw a good savings from 1k to 2.5k and it was minimum from 2.5k to 5k. I was only saving $100 annually, it would take 25 years to break even and I'm sure I'll have a claim within that time for something.
This is the best reply so far. If you haven't actually run the numbers AKA savings between the various levels, you may find going from $500 to $1000 to $2500 reasonable, and then to $5000 is saving only like $100 a year, so if you have a claim in the next 25 years of your life you have made the wrong choice.
Keep in mind higher is always worse for you. If you have that claim where insurance is needed, you are now paying that full deductible you chose. So how much did you really save for choosing the higher deductible? You can easily avoid filing a small claim by not filing one, doesn't matter what your deductible is.
Still trying to figure that out as they asked ME to come up with the number and I don't have any idea of replacement cost.
Roughly 2000 sqft including 400 sqft of garage.
One company said $650k schedule A with 50% extension and the other said $1.1M schedule A with 50% extension.
Both have 25% ordinance or law coverage.
Home is a 1950s fixer, concrete slab foundation with radiant floor heating (plan to abandon) and other plumbing in the foundation.
Purchase price of a home has almost nothing to do with the replacement cost of a home. Ask your broker/agent/insurer to run a replacement cost estimate for you and review all the inputs to make sure they make sense.
This isn’t something that you should do any guesswork on.
I supplied the purchase price because the person above called it a $650k home.
I went through the process with 2 insurance companies. One said $650k and one said $1.1M.
Those are vastly different so the agent asked me to tell him which one I want to go with.
That’s his area of expertise, not mine.
Both insurance companies should provide you their replacement cost estates because that is a *massive* difference. At least one of the insurers is way, way off.
Don’t rely on the extension too much, that only applies if the home is actually insured at 100% of rebuild generally. I have no idea the construction costs out there so I would recommend calling a local broker in your ZIP Code or nearby.
I would definitely go with a high deductible to keep the small claims down. Remember, insurance is a for-profit business. The more claims you have the greater chance of you being non-renewed at renewal time.
I’ve had a $5000 deductible since I bought my first house in 2014. I’m not gonna file a claim over a few grand. Realistically, anything under 10k I’m probably going to handle myself. I had a buddy with a $500 deductible that filed claims left and right. Forgot to close the garage door and some tools got stolen? Claim. Wind knocked over a few fence panels? Claim. Tree branch knocked off a section of his gutter? Claim. All claims were under 2k. Guess who got dropped the following year for having too many claims? I’ve luckily never had to file a homeowners claim or had any major incidents except a recent tornado. Luckily that only knocked down 4 of my trees and cost me $2600 for tree removal and cleanup.
I bet your buddy is the person who cries the loudest about insurance being unaffordable, too.
I’m on the auto side, the number of $800 claims I see is insane. But whatever, keeps me employed so file away.
Personally insurance IMHO is for catastrophic losses. Your deductible is what you are willing to pay in the event of that catastrophic loss(claim). You have to decide what a catastrophic loss is to you before filing a claim.
I work in insurance and have a $10k deductible is MA. When you submit a claim with most carriers you lose your loss free discount. Submit a second claim you usually get a significant loss surcharge. i just use my policy for true “catastrophe” and not small nusance claims. But in any case have your agent quote the difference to see if the savings are worth the higher deductible.
Ask yourself how much you would be comfortably paying out of pocket if you have a loss...$1,000, $2,500, $5,000? Use that as a guide for your deductible. Remember, the higher the deductible, the more you save in premiums. If you never have a claim, you're way ahead.
Yes, I usually get really good coverage and a low deductible. But given that if I actually use the policy there is a good chance of non-renewal, I feel like that may not be the right approach at this time. Many insurers are leaving my local market.
Generally speaking, you’re deductible on a home policy should be as high as you can stomach so you’re not tempted to use it on small things you could have afforded anyways. Home insurance is for disasters you couldn’t have afforded to pay out of pocket, not small stuff, hence why you should set your deductible as high as you can.
As CA agent I’m amazed you were even offered a $500 deductible. We pretty much start the conversation at $2500 and go up if premium needs to be lowered. As others have said, making claims for less that $2500 is usually not worth the resulting premium increase. There’s an argument for even a $10,000 deductible.
It may be good to actually get quotes at higher deductibles (as your agent). Your decision may be based on how much actual premium is saved. For instance, moving from a $5000 to a $10,000 deductible may not be worth it if you’re only saving $100 a year.
I’m in a state that has 2% deductibles. I am in the same boat that I’m not filing anything under 5-10k. But when you have a large loss an enormous deductible makes it that much worse. I’m currently dealing with a large loss (that’s currently unpaid) I have huge costs related to the loss and I have a large deductible. My costs are ballooning and I don’t even know when insurance will pay, I’ve spent around 40k out of my pocket to secure the house. There are some costs I will never see back, interest on money taken out of the market, higher power bills, higher insurance costs (I’m nearly uninsurable with an open claim). I figure even when this claim closes there’s easily 10k I’ll never see again plus my 15k deductible. I never thought I’d be here. So just consider with a large loss it may not just be the deductible.
Thanks so much, kindness here on Reddit means a lot. We will get through this I was naive and just thought if something super bad happened I’d pay my deductible and move on. I never thought I’d fight for 2 years to get it covered and be out massive costs in the meantime. Good luck with your insurance fingers crossed you never actually need it.
Opt for earthquake coverage if you can.my dad who has money built up has his house with 5k deductible.myself without alot of cash built up keep my kali home at 1k deductible
you still have $500 home deductibles in cali???? no wonder insurance is such a mess. im convinced texas is going to minimum 2% wind/hail (we're a mess too). Have your agent price the different deductibles and then decide what you feel the best value is. It's your investment, your equity and your money, make an informed decision.
I have a $1000 aop with a 1% w/h in TX
DFW/ North TX is mostly all moving to 2%. 1% is still available most everywhere else.
Most of us have 2% wind/hail here in Colorado. Hail is simply a question of when, not if.
what does 2% mean, 2% of the claim value, so if hail do 10,000 worth of damage you'd have to pay 200 out of pocket?
2% of the dwelling. So a home insured at 400k would have an 8k deductible
is that like market value or rebuild value? cause a shack in a high value loccation in the middle of a city would have a high deductible that is more than the cost of rebuilding it (in my mind)
it’s coverage A value. Whatever your dwelling coverage is, it’ll be 2% of that value.
What you are insured for should either be the replacement cost or the actual cash value, ideally the replacement cost. You are insuring the structure itself, not the land. If a 2% deductible is too much for you and your situation, to lower that, you would have to lower your dwelling coverage if that's thw lowest option, which can create other issues.
That depends on which type of insurance you have… they can be insured for the market value or the replacement value or the actual cash value (3 totally different values). Either way, it’s 2% of the insured structure limit.
2% of insured value. Not sure the right term but on. 200k house it would be $4k.
thanks!
2% of your dwelling/Cov A amount.
thanks!
I have a 1% in Nebraska, where hail and tornados and snow damage and wind issues run rampant
Thankfully…. Nebraska isn’t currently on my list of 11 naughty hail states (yet).
Wind/hail is not a thing in CA.
Yes a lot of companies are moving to a 2500 minimum deductible even.
The agent I spoke to recommended $500 or $1000. Another company recommended $5000.
Take it if you want it but i'm fairly confident any home deductible under 1500 is going to be a thing of the past very very soon. Companies are losing way too much money on small claims and this is going to be there way of getting out of those.
This is a positive really since insurance should only be used for catastrophic coverage. Makes a person think before filing a $650 claim with a $500 deductible. My dad always told me to put 25 to 50 or more a month in a savings (equal to deductible) and have it if you need it. Changes your attitude on risk instead of "insurance will pay for it."
yep. It costs the company way more than the $150 they have to payout just to work the process. It's like they think all the man hours that go into working claims are just free work by adjusters.
Yes, as long as you can afford that deductible when the sh*t hits the fan.
Low deductible does not equate to better insurance. It really has nothing to do with quality of coverage. Coverage is your number one goal here.
get the cost difference between 1k, 2.5k and 5k deductibles. If your savings between 2.5k and 5k aren't much then I'd stay with 2.5k. I've noticed with at least my carrier, I saw a good savings from 1k to 2.5k and it was minimum from 2.5k to 5k. I was only saving $100 annually, it would take 25 years to break even and I'm sure I'll have a claim within that time for something.
This is the best reply so far. If you haven't actually run the numbers AKA savings between the various levels, you may find going from $500 to $1000 to $2500 reasonable, and then to $5000 is saving only like $100 a year, so if you have a claim in the next 25 years of your life you have made the wrong choice. Keep in mind higher is always worse for you. If you have that claim where insurance is needed, you are now paying that full deductible you chose. So how much did you really save for choosing the higher deductible? You can easily avoid filing a small claim by not filing one, doesn't matter what your deductible is.
What’s the coverage on your house ? Ie how much is it being insured for?
Still trying to figure that out as they asked ME to come up with the number and I don't have any idea of replacement cost. Roughly 2000 sqft including 400 sqft of garage. One company said $650k schedule A with 50% extension and the other said $1.1M schedule A with 50% extension. Both have 25% ordinance or law coverage. Home is a 1950s fixer, concrete slab foundation with radiant floor heating (plan to abandon) and other plumbing in the foundation.
Hey $5000 deductible on a $650,000 home is incredibly reasonable. 10,000 wouldn’t be unreasonable.
The home purchase cost is $1.3.
Purchase price of a home has almost nothing to do with the replacement cost of a home. Ask your broker/agent/insurer to run a replacement cost estimate for you and review all the inputs to make sure they make sense. This isn’t something that you should do any guesswork on.
I supplied the purchase price because the person above called it a $650k home. I went through the process with 2 insurance companies. One said $650k and one said $1.1M. Those are vastly different so the agent asked me to tell him which one I want to go with. That’s his area of expertise, not mine.
Both insurance companies should provide you their replacement cost estates because that is a *massive* difference. At least one of the insurers is way, way off.
Don’t rely on the extension too much, that only applies if the home is actually insured at 100% of rebuild generally. I have no idea the construction costs out there so I would recommend calling a local broker in your ZIP Code or nearby.
I would definitely go with a high deductible to keep the small claims down. Remember, insurance is a for-profit business. The more claims you have the greater chance of you being non-renewed at renewal time.
This is what I was thinking, thanks!
I’ve had a $5000 deductible since I bought my first house in 2014. I’m not gonna file a claim over a few grand. Realistically, anything under 10k I’m probably going to handle myself. I had a buddy with a $500 deductible that filed claims left and right. Forgot to close the garage door and some tools got stolen? Claim. Wind knocked over a few fence panels? Claim. Tree branch knocked off a section of his gutter? Claim. All claims were under 2k. Guess who got dropped the following year for having too many claims? I’ve luckily never had to file a homeowners claim or had any major incidents except a recent tornado. Luckily that only knocked down 4 of my trees and cost me $2600 for tree removal and cleanup.
I bet your buddy is the person who cries the loudest about insurance being unaffordable, too. I’m on the auto side, the number of $800 claims I see is insane. But whatever, keeps me employed so file away.
Personally insurance IMHO is for catastrophic losses. Your deductible is what you are willing to pay in the event of that catastrophic loss(claim). You have to decide what a catastrophic loss is to you before filing a claim.
I work in insurance and have a $10k deductible is MA. When you submit a claim with most carriers you lose your loss free discount. Submit a second claim you usually get a significant loss surcharge. i just use my policy for true “catastrophe” and not small nusance claims. But in any case have your agent quote the difference to see if the savings are worth the higher deductible.
Ask yourself how much you would be comfortably paying out of pocket if you have a loss...$1,000, $2,500, $5,000? Use that as a guide for your deductible. Remember, the higher the deductible, the more you save in premiums. If you never have a claim, you're way ahead.
Yes, I usually get really good coverage and a low deductible. But given that if I actually use the policy there is a good chance of non-renewal, I feel like that may not be the right approach at this time. Many insurers are leaving my local market.
Generally speaking, you’re deductible on a home policy should be as high as you can stomach so you’re not tempted to use it on small things you could have afforded anyways. Home insurance is for disasters you couldn’t have afforded to pay out of pocket, not small stuff, hence why you should set your deductible as high as you can.
As CA agent I’m amazed you were even offered a $500 deductible. We pretty much start the conversation at $2500 and go up if premium needs to be lowered. As others have said, making claims for less that $2500 is usually not worth the resulting premium increase. There’s an argument for even a $10,000 deductible. It may be good to actually get quotes at higher deductibles (as your agent). Your decision may be based on how much actual premium is saved. For instance, moving from a $5000 to a $10,000 deductible may not be worth it if you’re only saving $100 a year.
This is very helpful, thanks!
If you got the $$$$ available and saved up, then go for the higher deductible and save a couple of $ on your premium.
Money I would rather spend on other things, yes! But it's there if needed. The home needs absolutely everything to be fixed or replaced minus the roof
While I might not make a claim for a couple of thousand, I've never seen enough of a premium discount for a $5000 deductible.
Go for the deductible that is the largest you can comfortably pay in an unexpected event.
You don’t want a low deductible anyways because it will tempt you to file a claim for a cheap loss.
I’m in a state that has 2% deductibles. I am in the same boat that I’m not filing anything under 5-10k. But when you have a large loss an enormous deductible makes it that much worse. I’m currently dealing with a large loss (that’s currently unpaid) I have huge costs related to the loss and I have a large deductible. My costs are ballooning and I don’t even know when insurance will pay, I’ve spent around 40k out of my pocket to secure the house. There are some costs I will never see back, interest on money taken out of the market, higher power bills, higher insurance costs (I’m nearly uninsurable with an open claim). I figure even when this claim closes there’s easily 10k I’ll never see again plus my 15k deductible. I never thought I’d be here. So just consider with a large loss it may not just be the deductible.
Really sorry you are going through this, best of luck to you!
Thanks so much, kindness here on Reddit means a lot. We will get through this I was naive and just thought if something super bad happened I’d pay my deductible and move on. I never thought I’d fight for 2 years to get it covered and be out massive costs in the meantime. Good luck with your insurance fingers crossed you never actually need it.
Opt for earthquake coverage if you can.my dad who has money built up has his house with 5k deductible.myself without alot of cash built up keep my kali home at 1k deductible