Deductibles and How They Affect Your Insurance Cost

Tegner Miller Did You KnowIn today’s Did YOU Know we will cover the term “Deductibles”:

When insurance companies advertise their policies, they will often tout 3 things: extensive coverage, low premiums, and low deductibles.

So what is a deductible and how will it affect how much you pay for insurance?

A deductible is the amount for which you will be responsible when a covered claim occurs.


1)  The deductible on your home insurance is $1,000, you have a kitchen fire and the repairs will cost $500.  Since your deductible of $1,000 is higher than the repairs, there will be no payment.

2)  The deductible on your home insurance is $1,000, you have a kitchen fire and the repairs will cost $3,000.  After applying the deductible of $1,000, the insurance company will issue a check for $2,000 for the repairs (the check may be payable to you or they may pay the contractor directly).

What accounts for the difference in deductibles, what deductible should you choose?

This is where premiums come into play. As mentioned in our last post, premiums are the annual cost of your insurance policy. We noted a few of the things that can make premiums fluctuate:  fast cars, dangerous careers, trampolines… However, there is another factor that can greatly influence your policy premium: your policy deductible.

When choosing your insurance policy, you should consider your risk threshold, lifestyle and personal history to determine whether you would prefer a lower premium or a lower deductible.

Of course, TMIB is here to help you determine the best coverage and deductible for your individual needs.  Please call us at 310-828-9662.

The information provided in our blogs are very brief overviews that do not provide complete descriptions of any coverage described nor do they list all of the important factors one should evaluate before deciding on a policy. Please speak to your broker at TMIB about your specific insurance needs and for more detailed information about types of coverage.