So, in short, the subsequent payment of the claim that you get from your insurance provider is the total loss amount minus the deductible.
Most of the time, you pay the deductible of your homeowners' insurance policy according to a per-claim basis. This means, if your home gets damaged two times just in a month, then you will have to pay two different deductibles.
On the other hand, if one homeowner's claim includes the coverage of two or more properties, then you will have to pay only one deductible. This means, if the structure of your house, personal property, and your garage are damaged by fire in your house, then you can report your homeowner's insurance policy and get the claim, however, you will need to pay the out-of-pocket expenses (deductibles) only once.
When Do the Deductibles Apply?
It is very important to recognize that the deductibles in home insurance are quite different from than deductibles of the home insurance policy. With a health insurance policy deductible is the fixed amount that you have to pay while making a claim. For example, if the deductible of your health insurance policy is Rs. 5,000, then you have to pay this amount whether your claim amount is Rs. 10,000 or Rs. 1,00,000.
On the other hand, in a home insurance policy, a deductible is the amount that you pay at every claim, regardless of how many claims you make in a year. So, if you live in an area where the chances of risk to your home are high, then you may have to make multiple home insurance claims and you have to pay from your pocket for all these times.
Types of Deductibles
The deductibles of your homeowner's insurance policy can be of any of the below-mentioned types as per your insurance provider:
- As Rupees Amount: Since the deductible is a specific amount that you pay from your pocket when claiming your homeowner's insurance policy, so you can select the exact amount that you will pay as deductible. For example, if your kitchen caught fire and the expenses of the damage are Rs. 30, 000 and your selected deductible are Rs. 5,000, then you have to pay Rs. 5,000 and the rest of the expenses will be borne by your insurance company.
- Percentage: In this case, the deductible is the percentage of the total amount of coverage of your insurance policy. Therefore, if you have insured your home with Rs. 20,00,000 and your selected deductible is 2%, then you have to pay Rs. 40,000 of any claim that you made.
- A Split: The hybrid of the above two deductibles if this. Rupees amount can be applied to most of the claims, however, the percentage claim can be triggered by some events.
Now as you have seen the deductible part, you must also know how much insurance do you require to get for your home. Here we are discussing the same:
How Much Home Insurance Do I Need?
Before deciding the part of the deductible, you should have to decide the amount of home insurance that you require for your dream house. So, you must consider the following points while deciding the same:
- Cost to Rebuild Your House: With various other costs, the cost of construction has also gone up since the time you have to build your home. The cost of rebuilding the house can as well be equated to the price at which you will sell it off.
- Alternate Accommodation Cost: This is another significant feature wherein the cost of your alternate accommodation is also covered in case your original accommodation gets damaged.
- Personal Belongings and Assets Cost: The cost of personal belongings and the cost of your valuable assets are also covered in most of the home insurance plans. However, there is a specific limit to which the insurance companies provide coverage for your possessions.
- Other's Liability: Your home insurance plan as well provides you coverage against various legal liabilities which can arise when any third-party encounters any injury or damage to property in your house premises. Some plans as well as provide coverage against any damage or loss that is caused by your family member or you.
The Final Words!
The amount that you pay as the premium of your homeowner's insurance policy is directly related to the deductible that you have selected. If the deductible is high, then you have to pay a low premium and if the deductible is low, then the premium amount increases. So, when deciding the deductible of your home insurance policy, you must consider the amount that you can afford to pay when making a claim.
