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Monday, November 24th, 2014


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Insurance Policies from Deductibles to Discounts

It’s important that you select the deductible that meets your needs the best, and take full advantage of all eligible discounts you may be entitled to. 

In order to select the right deductible, you’ll need to understand their relationship with insurance premiums. Here’s how they work:
Each year you’ll have to pay a premium to the insurance company to keep your different policies in force.  In return for your premium payment, the insurance company promises to cover you in case of an accident or loss.  Premiums work alongside deductibles.  A deductible is the amount of money you have to pay out-of-pocket when you file a claim before the insurance company will make a payment.  A reasonable deductible is $500 for auto and homeowner’s insurance.  If you have a $500 deductible and file a claim, you’ll be responsible for paying the first $500 out-of-pocket and the insurance company will pay for the rest.  Deductibles can go as low as $100 or even $0, but choosing a low deductible will make your premium payment much higher.  The lower your deductible the higher your premium.

Also, make sure your auto and homeowner’s policies take full advantage of all eligible discounts you may be entitled to.

Auto insurance discounts are issued for:
1. Having air bags, daytime running lights, anti-lock brakes, or an anti-theft device
2. Being claim free
3. Having your car and home insured with the same company (the multi-line discount)
4. Having multiple cars insured with the same company (the multi-car discount)
5. Having a favorable vehicle injury rating
6. Driving low miles per year
7. Being a good student
8. Being a long-term customer

Homeowner’s insurance discounts are issued for:
1. Having a home security system
2. Being claim free
3. Having your home and car insured with the same company (the multi-line discount)
4. Having smoke detectors
5. Living within 1,000 feet of a fire hydrant
6. Living close to a fire department
7. Living in a new home
8. Being a long-term customer

Matthew Brandeburg, CFP® is the author of the book Financial Planning For Your First Job, available at www.amazon.com. His book teaches young adults how to manage their money and take charge of their financial lives. He has seven years of financial planning experience and runs his own business, Bridgeway Financial Group, LLC, based in Columbus, Ohio.

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3 Responses to Insurance Policies from Deductibles to Discounts

  1. Ellen Underwood says:

    This is very helpful and important to know!!

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  3. Pingback: The Many Benefits of AARP | Coral Springs Health Insurance

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