Understanding Insurance Deductibles and Premiums

A deductible is the amount “deducted” from a covered insurance loss. For instance, let’s say your vehicle is damaged in a hailstorm and sustains $5,000 in covered damage. If you have comprehensive coverage and your deductible is $500, you will pay $500 and your insurance company will pay $4,500, which is the remaining amount that is covered under your policy.

The amount of your deductible impacts the amount of your premium. The higher your deductible—or the more you’re willing to pay for damages out of your own pocket—the lower your premium is likely to be.

A premium is the amount you pay for your insurance coverage. The more coverage you have, the higher your premium will likely be. The amount of your premium is solely determined by the likelihood of a claim being made. Factors that determine your premium can include your driving record, your age and what you drive. Two people might seem like similar drivers but have far different premiums because of these things.

Homeowners insurance also bases the amount of your premium on your likelihood of a claim. If you live in an area that could be at risk for wildfires or other natural disasters, your insurance company might have higher rates. In addition, if you have a pool, a trampoline, a wood burning stove or anything else that could put you at higher risk for a claim, your rates might be higher.

Talk to a Shelter® agent to help you find ways to minimize your risk that might help lower your rates.

• Whit Hensman – 2581 N. College Ave., Fayetteville; 479-443-WHIT or 888-999-9448 • Taylor Wethers – 1805 N. Green Acres Road, Fayetteville; 479-443-9700 or 877-248-4538 • JT Finley – 2142 N. College Ave., Fayetteville; 479-521-4220

• Randy Hutchinson – 1226 N. Garland Ave., Fayetteville; 479-444-3344