No one likes paying a deductible. It means you had a loss and submitted a claim to your insurance company.
But deductibles are an important component of the insurance-policyholder relationship. Paying a deductible means the policyholder has participated in the loss payment.
For example, a policyholder notices a wet spot in the ceiling of their home. They assume there is a water leak. Maybe they think, “I don’t have a deductible so I’ll wait until there’s more damage. Then I’ll call the insurance company to pay for the repair in full.” The policyholder is not considering that his insurance premiums may increase because of the repair cost.
With a deductible, the policyholder sees the wet spot on the ceiling and thinks, “I better take care of this now before it gets worse. I won’t have to turn it into my insurance and have to pay the deductible. The repair will be much less than my deductible.”
In the 1980s, deductibles of $100 and $250 were common. In the 1990s, the common deductible was $500. Today, deductibles of $1,000 are standard, especially on newly written policies.
Take care of those small repairs before submitting a claim. You’ll be glad you did.
