When choosing a homeowner’s policy, many people look at the price first and then what’s covered for that price. The annual premium is determined not only by the home itself but also by the local weather, crime rates, and other significant factors. Some of these things are within your control and some are not. One way to directly influence the cost of homeowner’s insurance is by choosing a higher or lower deductible plan.
What Is A Deductible And How Does It Work?
As a way to keep the number of frivolous claims under control, all insurance plans have deductibles. This is a cost-sharing aspect to insurance. The deductible is the amount you must pay out of pocket on a claim before insurance kicks in to cover the rest. Here is how it usually works:
● You file a claim
● An adjuster evaluates the claim
● You receive a check from the insurance company for the cost of repairs minus your deductible
That is a simplified version, if there is extensive damage and contractors are involved there may be additional steps. However, it shows you in laymen’s terms how a deductible works. You can also think of it this way; if you have a $1,000 deductible plan and you home has $10,000 worth of damage, you will get a check for $9,000.
The higher deductible you are willing to pay, the lower your monthly premium will be. Homeowners have to decide if it is safer for them to pay more per month for a lower deductible or not.
How OK Insurance Rates Are Impacted By Deductible
In order to find out what your annual or monthly payments will be at different deductibles, you can perform a side by side comparison of all the plans available to you. To give you an idea of how the prices change, there are some averages by deductible for Claremore and Tulsa, Oklahoma:
● Deductible of $500 / Insurance Rate of $3,811
● Deductible of $1,000 / Insurance Rate of $3,497
● Deductible of $1,500 / Insurance Rate of $3,262
● Deductible of $2,000 / Insurance Rate of $3,070
● Deductible of $5,000 / Insurance Rate of $2,695
Oklahoma experiences damaging weather conditions which significantly raise the rates of homeowner’s insurance. In any given year areas of OK can have tornadoes, wildfires, flooding, earthquakes, hail, snow, ice, and thunderstorms with intense winds. Besides the weather, some zip codes will be more expensive due to having more affluent homes. Areas with lower-priced homes but higher crime rates will also see an increase.
While you are not mandated by the state to carry homeowner’s insurance, most banks that lend you money for your home will require a specific minimum level of homeowner’s insurance. Homeowner’s insurance protects your most valuable asset, your home. Many people save up their whole lives to buy their dream home, you don’t want one storm or one fire to take your dream from you.