Deductible Dilemma

Hurricane Irma is a good reminder to check your own insurance policy for your coverages. It’s a relatively unknown fact, but most insurers stop writing policies in the event of an impending Hurricane. In previous years, there was a “box” around Florida that insurance companies would monitor to check if a hurricane was near. If the storm entered the "box" they’d stop accepting new policies. Nowadays, while there is no longer a “box” to watch out for, and most insurance companies state that policies cannot be issued if a Tropical Storm, Hurricane Watch or Warning has been provided by the National Weather Service for any part of the state. These newer restrictions can cause you undue stress if you’re considering shopping your policy this year.

Policy holders often consider higher deductibles to lower their premium. Lower deductibles mean less money out of pocket if a loss occurs but also results in higher premiums. Higher deductibles result in lower premiums but require that the insured bear a larger part of the loss... but is it worth it?  
A small fire in a $300,000 home that resulted in $2,500 of damage might not be covered if the policy holder has a 1% deductible. If the homeowner can afford to handle the cost of repairs in exchange for cheaper premiums, it might be worth it. On the other hand, if that loss would be difficult for the homeowner, a change in the deductible could be considered.

Homes in high-risk flood areas with mortgages from federally regulated or insured lenders require additional flood insurance. However, each homeowner needs to assess the risk of being able to financially sustain a flood loss on their home when flood insurance is not required. The recent events in south Texas and Louisiana are evidence that the unexpected can happen.

It is important to review your deductible and discuss risks with your property insurance agent so that you’re familiar with the amount and make any changes that would be appropriate before a claim is made.  The FEMA website has information and frequently asked questions about flood insurance.