The insured–the party who purchases the insurance–must pay a premium and a deductible to the insurer. The insurer is the company offering the insurance. The premium must be paid regardless of whether there is property damage. The premium is the amount that the insured pays for the option to allocate the risk of property damage to the insurer. The deductible, on the other hand, is the threshold amount that the insured must pay the insurer before the insurer will reach into its coffers to cover the remainder of the expenses associated with the property damage.
For example, if the deductible is $1000 and the property damage totals $5000, then the insured must pay the $1000 before the insurer will pay the remaining $4000. The same is true if the damage is $20,000 with a $1000 deductible. The insured must pay the first $1000 before the insurance company will pay the remaining $19,000.
It is possible to have a deductible of zero; however, the price of a low deductible is generally a high premium. The reverse is also true; the price of a low premium is a high deductible.
The choice between a high deductible or a high premium generally hinges on risk. For instance, a person who lives in a floodplain or a place known for its fires may choose to pay a higher premium in exchange for a lower deductible. Where risk is difficult to predict, the choice will boil down to what you can afford.
Either way, it is difficult not to choose the security of insurance.
Call us today for a free consultation 800-516-8059 or by email at: info@superrestoration.com
In your service,
Rene Vargas
Super Restoration
1 800 516 8059