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Southern Colorado Insurance Center Blog

All You Ever Wanted to Know About Insurance

The Difference Between Flat and Percentage Deductibles

If you have any type of insurance policy, you are likely familiar with the term, "deductible." This is the amount that you will have to pay when you file a claim before your policy will take over. While many types of insurance policies come with flat-rate deductibles, with homeowners insurance, you also have the option of selecting a percentage deductible. Here's what you need to know to decide which is right for you. 

About Flat Deductibles 

With a flat deductible on your homeowners insurance policy, your deductible is a fixed value that is set at the time you set up your policy. In general, the larger your deductible, the less you'll have to pay annually for your insurance coverage. With a smaller deductible, you won't have to pay as much out-of-pocket when you file a claim, though you'll pay more in your annual premiums. Each year when you renew your policy, you'll have the chance to make changes to your deductible in accordance with your budget. We have policies with a $2,500 flat deductible – contact us today for more information!

About Percentage Deductibles 

A percentage deductible is calculated based on the value of your policy. For example, if you insure your home for $300,000 with a 2-percent deductible, your deductible will amount to $6,000. The higher the percentage, the less you'll pay in premiums, and vice versa. If the value of your property increases, though, your deductible will increase accordingly, assuming you keep the same percentage rate. As the value of your home goes up over time, this can drastically increase your deductible. 

Which Is Best for You? 

Both types of deductibles have their merits and drawbacks, so you'll need to evaluate your situation carefully to make your decision. If you expect property values in your area to increase dramatically in the near future, it will likely make more sense for your budget to go with a flat deductible. If, on the other hand, home values are relatively stable, a percentage deductible might make sense. 

If you are struggling to make sense of it all, Southern Colorado Insurance is here to answer all your questions. We'll work with you and your budget to determine a suitable policy and deductible that you can afford. Reach out to our team today to learn more about protecting your home with homeowners insurance.