As with other insurance policies, renters insurance has a deductible. Many renters don't know what their deductible is or how it works. Thus, they are caught off-guard by how much they have to pay after filing a claim on their policy.
A deductible amount is how much you will pay when it comes time to file a claim. This amount varies depending on your policy and the agreement with your insurance agency. A renters insurance policy could have a deductible of $0 while others could be as much as $2,000.
What Affects Your Renters Insurance Deductible?
Some renters choose a higher deductible in order to have lower monthly premiums. Your insurance agency may work with you to settle on a deductible while others will determine that your deductible will be a certain percentage of the insured personal property. Keep in mind that insurance agencies often have a minimum deductible.
Your deductible isn't the only influence on the cost of your renters insurance premiums. These premiums are also influenced by:
- Credit score
- Claims history
- Coverage limits
- Value of the items insured
Is Having a Higher Deductible Better?
You can raise your deductible, but should you?
This depends. If you want lower monthly renters insurance premiums, raising your deductible can help with this. But having a higher deductible means that you will have to pay more out of pocket if you ever have to file a claim. For example, if you have a renters insurance policy with a $500 deductible and need to file a claim, you will pay $500 toward the damages related to the claim.
Before choosing to raise your deductible, speak with an advisor about the cost. If you can easily pay $500 to $1,000 for a claim, you will want to keep your deductible between this range. If large sums like this are not readily available, you may want a smaller deductible.
Also take careful consideration of your deductible before filing a renters insurance claim. If replacing or repairing the damage costs less than the price of your deductible, it may be more cost-effective to pay for the damages instead of filing a claim. Filing a claim will also usually raise your insurance rates. If the damage is much more than the cost of your deductible, however, you should consider filing a claim with your insurance agency.
Expanding Your Renters Insurance Coverage
You can expand your renters insurance coverage with additional floaters and coverages.
- Flood Insurance: Floods are not covered under a basic renters insurance policy. This separate insurance can provide compensation if your items are damaged or lost due to floods.
- Earthquake Insurance: Earthquakes are another natural disaster that isn’t covered under renters insurance. If you live in areas prone to earthquakes, you may want to purchase an extra earthquake insurance policy.
- Umbrella Liability Insurance: Umbrella liability insurance steps in once your other liability policies reach their maximum. For example, if your renters insurance policy covers $10,000 and you're sued for $11,000, an umbrella liability policy will cover the remaining $1,000.
- Floaters: Certain items have limited coverage under renters insurance. Jewelry, furs, art and some technology all have a limited amount of coverage under renters insurance. Floaters can help cover certain expensive items such as engagement rings.
A typical renters insurance policy includes $100,000 in personal liability coverage and $30,000 in personal possessions coverage. Thankfully, renters insurance is relatively affordable. The average cost of renters insurance per person is $17 a month.
If you're confused or uncertain about your deductible, make sure to speak with an BluCanopy agent.
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