The Walters Agency Podcast

Rising Deductibles: What Your Wallet Needs to Know

• Timothy Walters • Episode 6

Share episode

How Deep Are Your Pockets? Examining Changes In Deductibles

Rising insurance deductibles are reshaping how we protect our homes and property – and most people won't notice until they're filing a claim. Timothy Walters pulls back the curtain on this important trend that directly impacts your financial security.

Remember when $500 homeowners insurance deductibles were common? Those days are gone. Now, $2,500 minimum deductibles are becoming standard for most perils, with even higher thresholds – often $5,000 or percentage-based calculations – specifically for wind and hail damage. This shift isn't arbitrary; insurance companies have lost billions on weather-related claims in recent years while development has expanded into previously rural areas.

"If your pockets are like my hairline, they're probably a little bit less full than they used to be," Walters quips, highlighting how inflation compounds the challenge of higher out-of-pocket costs. The changing landscape means consumers need to approach insurance differently than in years past. Gone are the days when insurance could be "fire and forget." Now, regularly reviewing your policy details, particularly deductible amounts, is essential financial hygiene.

Higher deductibles can reduce premium costs, sometimes by hundreds of dollars annually. However, their greater significance often lies in eligibility – some properties simply cannot obtain coverage without accepting higher deductible thresholds. This reality demands greater financial preparation from homeowners, who should maintain sufficient reserves to cover their full deductible amount if disaster strikes. Whether it's homeowners, auto, or health insurance, understanding your deductible is crucial to proper protection.

Ready to review your coverage and ensure you have the right balance of protection and affordability? Call or text 423-417-2070 for a free 20-minute consultation with The Walters Agency team.

To learn more about The Walters Agency visit:
https://www.brightway.com/agencies/tn/knoxville/0237/team
The Walters Agency
7009 Asheville Hwy
Knoxville, TN 37924
423-417-2070

Speaker 1:

Welcome to the Walters Agency podcast, where insurance meets peace of mind. Hosted by licensed insurance agent and owner, timothy Walters, we're here to help families, homeowners and small business owners throughout East Tennessee protect what matters most Our mission creating win-win-win solutions for insurance. Let's dive in.

Speaker 2:

Rising deductibles could leave you footing more of the bill than you expect. Timothy Walters explains what's changing and what it means for your wallet. Welcome back everyone. Skip Monty here. Co-host, slash producer. Back in the studio with Timothy Walters. Licensed insurance agent and owner of the Walters Agency. Timothy, how's it going?

Speaker 3:

Going well, buddy, how are you doing?

Speaker 2:

Doing just fine. Doing just fine. A little stressed though about my insurance premiums. I'm actually doing some shopping around for homeowner's insurance, and that's on my mind, so I want to ask the question of our resident expert here, because my pockets aren't deep how deep are your pockets and what are the changes happening in deductibles?

Speaker 3:

Well, I will say, if you're shopping for insurance, you know a guy.

Speaker 2:

That's true.

Speaker 3:

Yeah, deductibles. Deductibles are something people don't think about until they're in the middle of a claim usually. So the question is how deep are your pockets? Well, if your pockets are like my hairline, they're probably a little bit less full than they used to be. Inflation is eating everybody's lunch, which is, of course, one of the reasons insurance costs more than it used to. So deductibles are playing a lot more of a role in basically how people can afford their insurance. Insurance companies, on every level, on every product that has deductibles, are starting to go in the direction of raising the base level of deductibles.

Speaker 3:

So a thousand years ago, when I started in this business, you could find homeowners insurance policies where the deductible was $500. You don't really see those anymore. There's probably still out there. I haven't seen one in a very long time. They're super rare these days, but I never say never, but I haven't seen one in a while. Even $1,000 deductibles are starting to become a little bit more rare, and when you can find them, they are more expensive. So what I'm seeing these days is companies moving to flat $2,500 minimum deductibles for all apparel and then either a $5,000 deductible for wind and hail damage or a percentage-based deductible.

Speaker 3:

So if you look at your insurance policy. A lot of people don't look at their insurance policies. You shouldn't. You look at the deductibles For homeowners insurance. It's typically split into two types of losses. You have your all other apparel, which is, like, you know, theft, fire, vandalism. You know, uh, somebody driving their, their car through your house, which I've seen happen um, you know all that, all that stuff. And then you have the wind and hail, which is exactly what it sounds like. It's wind and hail. So tornado comes by, you know, carries your house off to oz if you get a bad thunderstorm that rips half of your shingles off. Uh, that kind of thing is wind and hail damage and wind and hail damage.

Speaker 3:

The reason that companies are going to higher minimum deductibles, or percentage deductibles for that, is they tend to be for one event, the more expensive type of loss. So you know, the most exposed portions of your house, you know your outside walls and your roof are the ones that are probably gonna be more likely to be damaged in a major wind or hail event. So that's why companies are starting to increase those deductibles, because they're like every other business out there in the private market If they don't take in more money than they pay out, then they're going to go out of business. And insurance companies have lost billions and billions of dollars and went and hailed claims over the last few years. So they're trying to figure out ways to start mitigating that loss. And that's why it's not nefarious. It's not because insurance companies hate their clients.

Speaker 3:

I've had people say this to me. It's literally a business decision and it is what it is. You're basically, if you have a higher deductible. You know it is what it is. You know you're, basically, if you have a higher deductible, you just got to keep that in mind and you got to make sure you have enough money in reserve to help pay that deductible in the event you do need to file an insurance claim. And that's just the reality of the situation these days particularly in this region.

Speaker 2:

There's been a lot of well, not just this region but across the country. There's been a lot of significant events that I guess are driving that. I guess.

Speaker 3:

Well, there's more houses. There's more houses out in the middle of what used to be nowhere. It used to be cow country, now it's subdivisions, and those are areas where people didn't used to notice tornadoes, because if a couple of cows got lifted away, well, it wasn't that big of a deal. But now there's 300 houses where that cow field used to be and if a tornado goes through there it's a big deal.

Speaker 2:

True, true. Well, can adjusting my deductible if I choose to adjust my deductible higher or lower can that significantly change my premium?

Speaker 3:

Really depends on what you consider significant. If you're talking thousands and thousands of dollars, probably not. Having a higher deductible can save you hundreds of dollars, depending on the type of risk it is and a lot of different factors. Right, really, where having a higher deductible comes in handy, frankly, is eligibility. I shop a lot of different companies and I've noticed that to even have some companies be willing to offer terms to cover some properties in certain locations, they are requiring higher deductibles. And the companies that will write those same risks with a lower deductible, they are requiring higher deductibles. And the companies that will write those same risks with a lower deductible, they are more expensive. So you know it comes down to people say, well, I want a less expensive policy.

Speaker 3:

Well, starting now and probably going on to the foreseeable future, people are going to have to really start paying attention to their deductibles because they may have to get a policy with a higher deductible just to get the coverage they need to cover their house to satisfy a lender or just protect it. And again it comes back to you know there is a little bit of you do got to be responsible for yourself, so you do need to know what your insurance coverage you do need to know what your deductible is and you need to have a plan on if you have a $5,000 wind and hail deductible and it's going to cost you $15,000 to replace your roof, you need to make sure you have at least $5,000 in the kitty to help pay that deductible to replace your roof if there's an eligible roof claim. So again, insurance when I first started in this business was almost kind of fire and forget. You legitimately could kind of get a policy and not have to think about it very often as a client, not even speaking as an agent. But now, like I said, the forces we're looking at in the market and just with the environment that we're in right now, I do recommend people take a few minutes, especially when you first get your policy or the next year when the policy renews, look at your paperwork, say, hey, what is my deductible?

Speaker 3:

Did anything change? What's my coverage? And if you have an agent, you know, call your agent and talk to them. You know a good agent is going to be happy to spend, you know, five or 10 minutes to review your policy, you know, answer questions or point out things that he or she thinks is important and deductibles, like I said, starting in 2023, I'd say, and moving forward. I think people definitely need to start paying attention to what their deductibles are on their policies.

Speaker 2:

Definitely so. Are there different deductible options for different types of insurance?

Speaker 3:

Well, yeah, I mean, a deductible is just, you know, basically you self-insurance, okay, even people who don't have insurance, I like to say you're still insuring, you're just self-insuring, right, right. So a deductible for a homeowner's policy or an automobile insurance policy is just like a deductible for your medical insurance. It's what you have to pay out of pocket if you file a claim. Okay, so if you have an automobile policy and you have a $500 deductible for collision and you collide with something on the road and cause, I don't know, $2,500 worth of damage to your vehicle, well that means you're going to be responsible for $500 of that loss and then the insurance company will pick up the tab after that.

Speaker 3:

Same thing with homeowners insurance. You know, if you have a $2,500 deductible for all other peril and you have a fire loss that causes $10,000 worth of damage, well then you're self-insuring for $2,500 of that loss. Same thing with medical insurance. You know, if you have a $5,000 deductible for your medical insurance for emergencies and you go to the emergency room that's cost $10,000, then you're going to be on the hook for that $5,000 and your insurance picks up the tab for the rest. I mean it's the same principle across all lines of insurance.

Speaker 2:

Gotcha. Well, this has been very helpful to me personally and, by the way, I'll definitely be giving you a call because I know a guy. You do know a guy yeah, I know a guy. But very helpful information and a great word of advice to our listeners is if you don't know what your deductibles are, or if you don't know if they've changed or not, call your agent right.

Speaker 3:

Yes, call your agent. There's lots of great agents out there and you know, if your agent doesn't want to talk to you, you need to find a new agent.

Speaker 2:

Give Tim a call.

Speaker 3:

That's right Call me.

Speaker 2:

I'll talk to you, that's right.

Speaker 3:

More than you want to talk there you go there.

Speaker 2:

You go Well, timothy Leavitt. We'll catch you in the next episode. I hope you have a great rest of the day you too.

Speaker 1:

All right, man, we'll see you. That's a wrap on this episode of the walters agency podcast. Ready to find the right coverage for your home, business or family? Call or text 423-417-2070 for a free 20 minute consultation. Until next time, stay covered, stay protected and keep winning with the Walters agency.