Nashville, Tennessee insurance salesmen are as bad as Richmond, Virginia real estate agents sometimes. They bandy about insider terms that the average customer doesn't know in the hopes that it makes them sound more knowledgeable and get them a sale. However, obscure language can also disguise the parts of an insurance contract that are unfavorable to you, so it's important that you know exactly what they mean before you sign anything. We can help you on your road to understanding. We'll start off with one of the most common terms: deductible.

When you have insurance, you pay a monthly fee to a company and in turn that company agrees to pay you the value of the insured item if anything happens to it. Informing the insurance company that something has happened to it is called filing a claim. A deductible is any part of an insurance claim that is not covered by your provider. If you accept a policy with a deductible when you're insuring your car or your King West Condos unit, that means your insurance company only has to compensate you for any damage over the amount of the deductible.

For instance, say you take out an insurance policy on your cottage in the country with a deductible of $500. Then one day your sewage pumps in your septic tank fail and sewage backs up in your backyard. It costs $2,000 to clean the sewage up and to replace the pumps. You file a claim with your insurance company to get that money back. However, because you took a deductible of $500, they will only pay you $1,500 - the amount over the deductible. If it had cost $499.50 to fix, they wouldn't have had to pay you anything at all. So basically your deductible is the amount that you personally must be prepared to be set back in the event of an accident.

At first glace, a deductible just seems like the insurance company trying to get out of paying you the full amount you are due. This is only partially true. By accepting a deductible you are able to get lower premiums (monthly payments) on your insurance policy than if you were completely covered. The higher your deductible the lower your premiums. This can be helpful to anyone who maxed out their budget on Spokane, Washington condominiums and doesn't have a lot left over for insurance.

So how large a deductible should you accept? It depends on how much of a risk taker you are. Taking a large deductible is essentially betting that nothing will happen to your property. Talk to your agent at Brantford Realty and your banker to see what the likelihood is of anything happening and how much you can afford in an emergency.