Renters Insurance Deductibles

'Deductible' is a term that gets thrown around a lot. But what does it really mean when it comes to insurance? The renters insurance deductible is the amount of money the insurance company recognizes as part of your loss, but does not recompense you for. If you've got a policy with a low deductible, then you can claim more losses and receive reimbursement according to the terms of your policy. However, it's important to understand that such policies can cost twice as much as those with higher deductibles. Basically, the higher the deductible, the lower the premium.

But what deductible amount is a reasonable choice? We've all heard horror stories about people who decided to save a few dollars by purchasing a renters insurance policy with a higher deductible. While on paper, saving 25% on a policy just by increasing the deductible from $500 to $2,000 might seem like a bargain, consider the reality. When purchasing insurance, it's normal to imagine worst- case scenarios, and then decide those particular events couldn't possibly happen. Spending almost half as much on a policy that, you assume, you'll never need to use, seems to combine a higher level of comfort with a lower cost.

So you save a few hundred dollars. Then there's a fire, or a tree falls on your rental unit, or torrential rainfall results in flood conditions and a mudslide. By the time you are allowed back into your rental, you find that pretty much everything you own is broken, drenched, melted or useless. Does the couple hundred dollars you saved in insurance seem worth it now?

On the other hand, how likely is that scenario? Not terribly likely at all; we have insurance to ease the financial pain in a worst- case situation, and to soothe our souls in the meantime. If you can afford only a minimal renters insurance policy, having one with a high deductible is a better choice than having none at all. Should an unlikely but possible situation arise, you might have to scrape together the money to bridge the gap between what the insurance company pays and what it costs to get your life back on track. But how much better is that than having to pay for everything you've lost, by yourself?

Renters Insurance Directory

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