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Understanding Home Insurance Deductibles: An Interview with Dick Ostrander of Ostrander Insurance

By Dick Ostrander

Tell us a little bit about your company and its foundation.

Ostrander Insurance Agency was founded in 1979 by Dick Ostrander and is still owned and managed by him. The office, which is located opposite the post office on Route 140 in Bellingham, MA, has an address of 94 David Road, Bellingham, MA 02019. The agency offers auto, home and business insurance options to local residents and businesses. With many different insurance companies to choose from, Ostrander Insurance offers a variety of coverage and premium options to their clients. One of the hallmarks of the business is a dedicated staff, averaging over 20 years experience per staff member. The business has been named Readers Choice Award Winner as the best insurance agency in Bellingham many times, including 2012 and 2013.

What are some of the services your company provides?

Besides personal and business insurance coverage, we also offer free notary to our clients and help make DMV or Registry runs for them when possible.

First off, what is the definition of deductibles? Do these types ever vary across different insurance companies?

A deductible represents the dollar amount that you must put forth first, before your insurance company starts contributing towards your claim. The insurer deducts your deductible from the covered portion of your claim and pays you the difference.

What are the two types of deductibles? Do these types ever vary across different insurance companies?

On property policies it is possible to have a regular policy deductible and a separate, WIND deductible. This is typical for properties with coastal exposures, such as those on Cape Cod and the Islands. The separate WIND deductible usually ranges from 1% to 5% depending on your proximity to the water. The closer you are to the water, the more likely your WIND deductible will be nearer 5%. The percentages of 1%, 2%, 3%, etc. refer to the percentage of coverage that is shown on your policy in section A for your house. Also, if you choose earthquake coverage for your homeowner policy, which is not covered under the standard homeowner policy, it will come with a 5% deductible. Once again, this means that if you suffer an earthquake claim then a deductible of 5% of your coverage A (house) coverage would apply. These deductible concepts are generally true of all insurance companies. One notable exception that works against consumers is the Massachusetts Property Insurance Company (a/k/a The Fair Plan) which always charges at least a 1% WIND deductible on standard homeowner policies, even when your house is inland, well away from the coast. This isn't good for the homeowner since that means any wind losses will end up costing them more than the standard policy deductible that would likely have been only $500 or $1,000. Some auto insurance companies are now offering "deductible dollars" for long-time customers. For example, we represent at least two different auto insurers that grow credits or deductible dollars over time for long-time clients, which can be used against future claims to reduce the impact of their stated deductible as shown on their auto policy.

What are the disadvantages to choosing a higher deductible? The advantages?

Unless you know you are going to have a claim, you should always choose a deductible that is as high as you can financially stand it; the higher the better. But, that said, you should also ask how much you will save at the different deductible levels. For example, a young driver may save as much as $300-$400 per year to raise their collision deductible from $500 to $1,000. However, a senior citizen with inexpensive rates may save as little as $50.00. The cost/benefit is much better for the person who has a higher premium or multiple vehicles. A good insurance agent will help you decide what make the most sense for you. Carrying a low deductible and making a series of small dollar claims with your homeowner carrier is a sure way to get yourself Non-Renewed and end up in the assigned risk pool due to claims frequency issues. That's when you find yourself in The Fair Plan paying higher rates for several years, or longer. Try your best to keep your rates lower with higher deductibles and avoid making claims whenever possible; you'll save it the long-run.

What' the best way for people to get in contact with you and your company?

We can be found on the web at www.ostranderinsurance.com. Our email is info@ostranderinsurance.com and our phone number is (508) 966-1116.

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