Managing Your Renters Insurance Deductibles

You might have to buy a renters insurance policy before you can move into a rental home. This means you have to choose the policy limits that are not only required of you, but also are appropriate for your living needs. You also want to keep your policy affordable, and maximize the amount of money you can receive for a potential claim. This might mean that you can manipulate your coverage’s deductibles in cost-effective ways. Here’s how you can do so affordably.

Coverage in Renters Insurance

Most renters policies include possessions insurance, which pays for the damage to your belongings when a covered event (a fire, burst pipe, theft, vandalism, etc.) damages them. The possessions policy will pay you a maximum amount of money for the damage to your belongings, subject to certain limits. One of these limits might be a term insurers refer to as the cost of a claim minus the deductible.

How Deductibles Work

If you look at your renters insurance, you will see that there will be a deductible attached to your possessions insurance. It might be $500, $750, $1,000 or some other factor. Usually, it’s a minimum of $250, though this varies from insurer to insurer.

The deductible is a cost that insurers deduct from an insured party’s claim cost before they decide the amount of money that they will pay the insured party. So, your insurer will pay you the amount of your possessions losses, minus this claim.

For example, say you have a $500 possessions deductible, and your possessions sustain $2,000 in damage in a fire. Therefore, your insurer will pay you $1,500 for the damage. This is the $2,000 in damage costs, minus the $500 deductible. If the cost of damage is less than the deductible, such as $450 with the $500 deductible, then your policy won’t pay.

Should You Increase or Decrease Your Deductible?

The thing about deductibles is that you can usually choose how high or low you want yours to be.

On one hand, if you increase your deductible, then you might pay a lower cost for your insurance policy overall. A higher deductible reduces the amount an insurer might have to pay you for a claim. Therefore, they might not have to charge you as much for your policy.

However, if you increase your deductible significantly, there’s are more chances where your insurers might not pay for property damage. As a result, you will have to pay. Therefore, you have to be able to afford the deductible you choose to pay.

Rather than raising your deductible arbitrarily, talk to your insurance provider. They can help you determine the right course of action, and you can benefit from the deductible you eventually choose.