Florida Home Owner Insurance: Lower the Cost by Increasing Deductibles
For those who own a home or are living in Florida, having a Florida home owner insurance policy is a must to protect your property and investment in the event of unwanted occurrences like fire, theft, and various natural disasters. This will save home owners from a lot of future headaches and from putting a bigger strain on their budget once disaster strikes.
Various insurance policies have different deductibles. A deductible is defined as the share an insurer will shoulder before any claims can be made with the insurance company. The deductible is put in
place to deter the claiming of trivial losses. For example, fire burned down an insured person’s home. The insured has a deductible of $4,000. For a covered claim, the deductible is generally the policyholder’s responsibility; the insurer pays eligible amounts above it, subject to coverage limits, exclusions, and policy terms.
In Florida there are two deductibles which a home owner is advised to pay: the Hurricane deductible and the All Other Perils or AOP deductible.
The Hurricane deductible is equivalent to two percent of an insured home’s value. This rate applies exclusively to the home itself and will not reflect the cost of the land where it is built. This is a once-a-year deductible. So if it happens that the Florida home owner is affected by two or more hurricanes within a year, he will only have to pay the deductible for one hurricane occurrence.
The AOP deductible covers other perils that can afflict a home such as fire and theft. Florida home owner insurance will usually have an AOP deductible option of $1,000, $2,500 and $5,000. A Florida home owner insurance AOP deductible covers home damage expenses. But this is not applicable to hurricane damage.
To lower the insurance expense, a home owner is advised to get a higher deductible. A higher deductible will save the insurance company the time and money in handling low value insurance claims. It will allow the company to earn more and thus be of better service to their clients that are affected by much bigger loss. A higher deductible equals lower insurance premium for the insurer.
Available discounts and rating considerations depend on the insurer and applicable Florida rules.
In choosing a higher deductible amount, a Florida home owner insurance holder will get a lower insurance cost. And there is always a possibility that the insured will be given a discount by the insurer which will allow the insurance premium to be more budget-friendly. A higher deductible may reduce premium, but it increases the amount the policyholder must pay toward a covered loss and does not broaden coverage.
