If you are an owner of a small business, you face a situation like a crossroads of choosing whether to purchase a liability insurance plan. We advise that, for most small businesses, purchasing a liability insurance plan is a must. Renters insurance covers your items as well as liability for injuries that occur on your premises. An insurance risk, such as theft, fire, or a storm, must cause damage to your personal property. If an insurance risk damages your things, you’ll have to pay a deductible each time you file a claim.
What is a deductible on renters insurance?
A deductible is a loss claim that the insured must pay. The amount of your deductible reduces your claim payout. Your deductible can be a fixed amount or a percentage of your premium. The average renters deductible is between $500 and $1,000. Your deductible amount, as well as whether it is a percentage or a dollar number, will be displayed on the declarations page of your insurance policy. Your deductible will apply each time you file a claim and only use personal property damage, not personal liability coverage.
Deductibles and how they function
If your deductible is a dollar figure, it gets subtracted from your claim. Let’s imagine your apartment is affected due to a storm, and the insurance company estimates your loss to be $5,000. The insurance company will reimburse you $4,500 if your deductible is $500.If your deductible is a percentage, its amount gets eliminated from your claim (which is more common for homeowners insurance coverage). If your belongings have insurance for $50,000, and you have a 2% deductible, each claim is $1,000. For example, if you have a $5,000 loss, the insurance provider will reduce $1,000 your loss and pay you $4,000 instead.
A higher deductible helps you in saving money on your annual premium
Renters insurance typically costs roughly $15 per month or $180 per year. Increasing your deductible is one approach to lowering your rate. Your annual premium reduces if your deductible is more significant than $1,000. However, if you incur a loss and file a claim, a substantial amount of compensation will be removed. It is vital if you live in weather-prone or disaster-prone areas, such as flood zones, hurricanes, tornadoes, wildfires, mudslides, hail, or earthquakes, where you may have numerous claims in a year.
Other forms of deductibles for renters insurance
There are additional deductibles for flood insurance and earthquake insurance in addition to your usual renter’s insurance deductible.
Deductibles for flood insurance
To cover flood-related damage, you’ll need flood insurance in addition to your renter’s insurance policy. If you reside in a flood zone prone area, you must have flood insurance. According to the Insurance Information Institute, flood insurance deductibles vary by state and insurance carrier.
Deductibles for earthquake insurance
Earthquake insurance, commonly referred to as “earth movement” insurance, is a separate policy. The Federal Emergency Management Agency (FEMA) produces earthquake hazard maps that illustrate the magnitude and likelihood of seismic activity around the country. Usually, the earthquake insurance deductibles range from 2% to 20%, with the average being approximately 10%. The California Earthquake Authority (CEA) provides coverage for California citizens, with deductibles varying depending on the policy chosen.
Deductibles for jewellery and personal effects
Renters insurance covers electronics up to $2,500 and jewellery up to $1,500. If the value of your jewels or gadgets exceeds the policy limits, you should consider adding a personal effects rider or endorsement to your policy. Suppose you have a claim for an endorsement or floater item, such as jewellery. In that case, you will be responsible for the deductible set by that endorsement or floater item, not the regular deductible.
Ask your representative about the varying deductibles when getting renters insurance.