Choosing between a lower premium or better coverage?
I recently purchased a house and finding insurance has been challenging due to the home’s age and other factors. I’m currently considering two options: One quote is $2,016 per year, but it lacks coverage for overland flooding, which is common in our area. The second quote is around $3,200 annually and includes overland flood coverage. I could lower that premium to $2,600 by increasing the deductible from $2,500 to $5,000, but that seems quite steep.
I’m feeling overwhelmed with the decision. This property might not be the best investment, and while the premium is important, I also want to avoid a potentially hefty bill from an overland flood. Any thoughts or advice would be greatly appreciated!
It sounds like you’re in a tough situation, and it’s understandable to feel overwhelmed with these decisions. Here are a few points to consider that might help clarify your thoughts:
Assess Your Risk Tolerance: Consider the likelihood of overland flooding in your area. If it’s a common issue, the peace of mind from having that coverage might outweigh the higher premium. On the other hand, if flooding is rare, you might decide to go with the lower premium option.
Calculate Potential Costs: Think about what financial impact a flood could have on your house. If it’s likely to cause significant damage and/or require expensive repairs, the higher premium may ultimately save you money in the long run.
Split the Difference: If you choose the $2600 premium with the higher deductible, weigh the probability of a flood against the financial burden of that deductible. Sometimes, it’s about finding a sweet spot between premium costs and deductible amounts.
Consider Additional Coverage Options: If you choose the lower premium option without flood coverage, investigate if you can add it later or purchase a separate flood insurance policy. This can sometimes provide more flexibility.
Consult with an Insurance Agent: Speaking with a knowledgeable agent could help you understand the policies better, and they might even provide insights into other options or local conditions that can inform your decision-making.
Evaluate Your Financial Situation: Consider your financial ability to pay higher premiums or a larger deductible if a flood occurs. If you’re already stretched thin with your home purchase, it might be worth investing in comprehensive coverage.
Ultimately, it’s about balancing your budget with the potential risks involved with your specific property. Take your time, evaluate your priorities, and choose the option that feels right for you. Good luck!