- The higher the deductible you select the lower the premium will be, and vice versa. The idea here is a cost savings for taking on more risk in the event of a loss. By having a higher deductible, insurance companies can charge policyholders less premium.
- Everyone loves lower annual insurance premiums, but it is important to balance that benefit with the out of pocket expense if a loss were to occur. The premium associated with a $10,000 deductible might look great on paper, but if a flood occurs and causes damage, can you really afford a $10,000 deductible? It is important to think about short term cost savings benefits versus long term risk.
What is a flood insurance deductible and how does it work?
Like most other insurance products, your flood insurance has a deductible as part of the policy. But what exactly is a deductible? According to the Insurance Information Institute a deductible is defined as: “An amount of money that you yourself are responsible for paying toward an insured loss. When a disaster strikes your home or you have a car accident, the amount of the deductible is subtracted, or ‘deducted,’ from your claim payment.” So, what is the right deductible amount for you? A few things to keep in mind when selecting your deductible amount: