Do you know what your insurance deductible is?
In most cases, people tend to select a 1% rate in case of things like hail or fire damage. This means that if someone with a 1% annual rate has a $250,000 home, then their deductible would amount to $2,500.
But in some cases, people may take shortcuts and attempt to get a lower annual rate on their insurance premium by selecting a rate of 2% or 3%. This can land you in hot water, though. To explain why, I’d like to recount a scenario I encountered recently.
Just last week I had a client who was selling his $250,000 home. When the inspector came out to examine the home, he declared the roof to be a total loss as the result of hail damage. My client picked up the phone and called their insurance company, who sent out an adjuster that agreed with the inspector’s claim.
Because the client had selected a 2% rate rather than a 1% rate, he will be forced to pay $5,000 of the total $10,000 that’s needed to repair the roof. It just goes to show how quickly things can creep up on you.
The bottom line is that you’ve got to make sure you know what your insurance policy and exposure actually is. The last thing you want to do is cut corners to save a few pennies up front, only to wind up paying for a major expense later on as a result.
If you have any other questions or would like more information, feel free to give me a call or send me an email. I look forward to hearing from you soon.