Percentage Deductibles: Coming to a Policy Near You
Lately I’ve been hearing a lot about insurance companies switching from a flat deductible to a deductible based on a percentage of a home’s value. A couple of my fellow personal finance bloggers - AllFinancialMatters and Beyond the Consumer have made recent posts detailing their dilemmas, and today in the Wall Street Journal there is an article about homeowners being stung by higher deductibles. The percentage deductibles in question are typically reserved for natural events such as high winds, earthquakes, and tornadoes.
From what I’ve read, these percentage deductibles seem to be mandatory (in most cases). Even the percentage amount doesn’t sound like it is negotiable.
It doesn’t make sense to me why anything on an insurance policy is mandatory. If the insurance company is losing money in areas that have had problems with natural events, they can certainly give percentage deductibles as an option. If the policy holder decides they would rather pay more premium to get rid of it, though, the insurance company should oblige.
Let this post serve as your reminder to do a policy “check-up” to make sure you understand what is in all of your insurance policies. You don’t want to end up paying a $7,000 deductible if you don’t have to.
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