Buyback Deductibles: How To Reduce Your Out-of-Pocket Deductible Costs

When your property is damaged, the last thing you want to think about is paying your deductible. Thankfully, you can lower that cost by purchasing a buyback deductible. A deductible buyback policy is one of the most efficient ways to help save money on your deductible and ease the stress of paying out-of-pocket.

Key Takeaways

• A buyback deductible helps reduce the potentially high out-of-pocket expenses that follow a claim.
• You can purchase a buyback deductible policy for specific perils, such as wind or hail, or for your overall insurance policy.
• Speaking to an insurance agent is the best way to determine if this policy is right for you.

What is a Buyback Deductible?

A buyback deductible, also referred to as deductible buyback or a deductible buy down, is an insurance option that helps decrease the deductible amount you pay out of pocket after a covered loss. This is separate from your primary insurance policy, and insurers typically offer it as a separate policy or as an add-on to the primary policy.

Usually, homeowners or commercial property owners purchase deductible buy down policies to help offset the cost of their deductible. This type of coverage is beneficial for those who want the savings a higher deductible offers, but also want a lower out-of-pocket expense if they ever need to file a claim. It provides an option for those who might not be able to pay the full deductible immediately.

How Does a Buyback Deductible Work?

When your buyback deductible activates, it lowers the amount you need to pay upfront. How does this work? Essentially, you “buy back” your deductible by paying an additional premium, and this reduces the amount you pay in the event of a claim. As mentioned before, insurers typically offer this option as either an additional policy or as an add-on to your primary insurance policy. Though it does not work independently of your primary insurance policy, and you only trigger it when you need to pay your deductible. 

For example, let’s say a homeowner’s home is insured for $500,000 with a 5% deductible, or $25,000. The homeowner can purchase a buyback deductible policy to cover 3%, or $15,000, of their deductible, so when they file a claim they only pay a more manageable 2%, or $10,000, out of pocket. Think of it as insurance on your deductible!

Advantages of Buyback Deductibles

There are quite a few advantages that come with purchasing a buyback policy:

• Protection from Unexpected Expenses: Lowering your deductible through a deductible buy down policy helps you better manage your finances in the case of an unexpected claim. Smaller out-of-pocket costs put less financial strain on you and make filing a claim much more manageable.
• Policy Personalization: You can better adjust your out-of-pocket deductible expense to fit your financial situation. Personalizing your policy with a buyback deductible allows you to do what works best for you.
• Seamless Coverage: Deductible buyback coverage helps to create seamless coverage throughout a policy because it follows the deductible structure of the underlying policy.

Wind Buyback Insurance

Wind deductible buyback coverage is a specific type of buyback coverage that only activates in the event of a loss caused by wind. In recent years, the insurance market has seen an increase in windstorm insurance rates and deductibles due to the rising number of wind-related catastrophes. Insurers are raising their prices to help cover the costs of the rising number of claims filed in these events. A wind deductible buyback policy is a great way to reduce out-of-pocket costs for those who live in these wind damage prone areas.

Swyfft offers a Wind Deductible Buyback Program across 26 states available for wind/hail and named storm deductibles. This program focuses on bridging the gap between low premiums and high out-of-pocket deductible expenses. Swyfft’s program reduces an insured’s financial responsibility following a covered loss (i.e., wind/hail or named storm). Their wind deductible buyback coverage can save you tens of thousands of dollars in the event of a claim. Having this extra insurance in place, especially for those who live in storm-prone areas, can help provide peace of mind.

Is a Buyback Deductible Right for Me?

There are a few things to consider when you’re thinking about purchasing a buyback policy. Firstly, consider your ability to pay the original deductible if you needed to file a claim. If paying the full deductible out-of-pocket would be financially straining, a buyback policy might be beneficial.

Think about the additional costs of the premium in comparison with the benefit of a lower deductible. Would the savings of a lower out-of-pocket payment during a claim outweigh the extra cost of the buyback policy?

Additionally, consider the probability of a claim. Are you in an area prone to severe weather like hurricanes or tornadoes? Do you park your car in the street? These things can leave you more vulnerable to perils, increasing your chances of needing to pay a deductible. Many insurance companies give higher deductibles to areas more prone to risks such as hurricanes and hail.

Save On Your Deductible With TGS Insurance

Here at TGS Insurance, we understand that deductibles can be a pain. Paying a high deductible is the last thing you want to deal with when your property sustains damage. That’s why we’re dedicated to helping you find every option available, and securing you the best insurance for the best price. Call one of our agents today to learn more about buyback options that could help you save on your annual premiums.

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