Insurance Word For The Day

DEDUCTIBLE: The amount of loss paid by the policyholder. Either a specified dollar amount, a percentage of the claim amount, or a specified amount of time that must elapse before benefits are paid. The bigger the deductible, the lower the premium charged for the same coverage.

The deductible is an amount of money that you must pay toward the repair or replacement of the insured item. For instance, if you have a $500 deductible for collision coverage on your car, and you run into a ditch, you will be responsible for the first $500 in repairs.

The higher your deductible is, the lower your insurance cost will be. It is important to remember, however, that your deductible should not be more than you can easily write a check for on any given day. If spending $500 to fix your car tomorrow would take groceries off the table, or make the rent late then you should opt for a lower deductible. You cannot afford the risk.

I often suggest to my clients that they write a check for their deductible amount today. We can put it in a high yield savings account and then add to that account automatically over time. As the balance on the account rises we can raise the deductible too! With this strategy a client never finds themselves without the funds needed to meet a deductible, and they keep their insurance costs as low as possible.

Another strategy is to choose a policy option with a deductible credit or reward. As you earn more deductible credit, you can raise the deductible. A policy with a $1000 deductible and $500 in deductible credits is often less expensive than a policy with a $500 deductible, and yet the cost out of pocket after an accident is the same!

If you would like to discuss strategies for managing deductibles and insurance costs please call me at 509-892-9139 and we can do a review of your policies.

Is your most precious item covered?

Many people seem almost afraid to have an in depth discussion with their insurance agent. They seem to have a fear that if they tell their agent what they own, their agent will just try to sell them a coverage they don't need. When asked if they have items that might need to be listed separately on the policy they simply say no, not even wanting to know how much that insurance might cost, or how valuable that insurance might be. Sometimes they don't even understand that their are limitations on certain types of personal property, or instances where they might want to avoid having to pay a deductible.

My son has played Viola for 4 years now. Last fall, just in time for the start of High School he spent 3 years of savings on a new instrument. He earned every penny of that money mowing lawns and doing other odd jobs. He was, and is, so proud of his fine instrument. John has always been careful about his instruments in the past, and honestly if I weren't an agent I probably would not have thought about calling to let someone know my son had bought a new viola. But I am an agent, and so I added the instrument to our policy. It didn't cost much, under $10 a year. I figured we would never need the coverage, but didn't ever want him to have to go without the music he loves so much.

I didn't think about that coverage again until Monday. John called me from school. During orchestra class he tripped and fell. He broke his precious viola. It was, potentially, the end of his world. He had a seating audition that evening with the symphony. He was currently participating in the pit orchestra for the school drama department's winter musical. He had a competition coming up in just a few weeks. He HAD to have an instrument.

The greatest pleasure in my vocation is being able to tell an insured that it is OK. That I will help them put their lives back together when tragedy strikes. I have stood with people and assured them after house fires and car accidents. And I have stood with a young man who needed to replace a viola. I was able to tell my son that his viola was covered. That we would have it repaired and that our insurance would cover the bill. I was able to assure him that the instrument he dedicated so much of his time and effort to would soon be whole again and back in his possession. In the meantime Custom Strings was willing to give him a loaner while his viola was fixed.

I encourage you to take a moment to think what items are precious and necessary to you. What would you do if that item were lost, broken or stolen. Would that item be covered by your insurance? Would there be a deductible? If it isn't covered, what can you do to make sure it is?
Insurance is a partnership. I need you to work with me so that I can present your coverage options to you. In the end you will decide what risks you want to take, and what risks you want your insurance to take for you. The key is knowing what decision you've made ahead of time.

When you are ready to discuss your insurance needs call me at 509-892-9139. I am here to help.