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Understanding Home Insurance Deductibles: An Interview with Dave O'Brien of Noyle Johnson Group

By Dave O'Brien

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

Agency was started in 1876 by the Gale family in Plainfield VT. Became the Noyle W. Johnson Agency in 1951. At present we have 3 offices (Montpelier, Danville, Barre) and 43 employees. We're a property and casualty agency, we write personal as well as commercial lines.

What are some of the services your company provides?

We handle any kind of personal or business property and casualty coverage. We take our customers situation, canvass the marketplace and figure out which carriers and coverage make sense given their situation.

First off, what is the definition of a deductible?

Basically it's whatever the customer has to cover prior to the insurance company starting to pay.

How are deductibles calculated? Is it more common for an insurance company to use fixed dollar amount or a percentage of my home's insured value?

Fixed dollar is pretty standard. There are a few that use a percentage, we don't represent any that do.

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

Disadvantage is simply that when the claim happens, policyholder is paying more out of pocket before the company pays. Advantage is savings. You do run into decreasing returns, in other words as you increase your deductible the percentage you save on your premium drops. Although it's not really an advantage per se, keeping a higher deductible discourages the submission of claims, which can be a benefit. Having a clean record when it comes to claims typically helps the customer save money in premiums over the long haul. I have that discussion with my customers often, why keep a $500 homeowners deductible if you know you're never going to submit a claim that's less then 1k. Might as well have a higher deductible. Savings might not be great to go from $500 to 1k, but if you know you're not going to submit the small stuff might as well pocket the difference. Of course, people need to think about what kind of deductible they can handle if something does happen.

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

Office (802) 223.9652

Fax (802) 223.7515

Email: dobrien@nwjinsurance.com

www.nwjinsurance.com

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