Why does insurance have a deductible, and how should you choose yours?
Short answer. Insurance has a deductible so you share in each loss, which keeps premiums lower and keeps small repairs out of the claims system. Choose a level you could pay the week after a storm, and compare the premium savings of a higher deductible with how often your area sees hail and wind.
Choosing a level
- Start with cash. A deductible should be an amount you can pay without debt.
- Check the storm deductible separately. In Georgia many policies have a wind and hail deductible that is a percentage of the dwelling limit. That is the one that applies to most roof claims. See percentage wind and hail deductibles.
- Run the break even. If raising the deductible from $1,000 to $2,500 saves a set amount per year, divide $1,500 by that savings. That is how many storm free years it takes to come out ahead.
- Think about your roof. An older roof in a hail belt is more likely to need a claim soon, which favors a lower deductible.
Is there insurance for your deductible?
Homeowners sometimes search for a way to insure the deductible itself. A few specialty products and endorsements reduce or reimburse deductibles in limited situations; ask your agent what is available and read the terms carefully. What is not legitimate is a contractor promising to cover it. In Georgia, a roofer who waives, absorbs or rebates your deductible is breaking the law, and the claim is usually inflated to pay for it. See roofers and deductibles.
The simplest protection
Set aside your storm deductible in savings, and know the number in dollars. When the next hailstorm comes, you will know immediately whether a claim makes sense.