What Is a Homeowners Insurance Deductible?

WRITTEN BY: Mark Romero


A homeowners insurance deductible is what you agree to pay out of pocket for a loss or repair that’s covered by your policy. Suppose you have a $2,500 deductible, and the total damages cost comes to $7,500. Your insurance company would then subtract your deductible from the total cost, and cover the rest. In this case, you would owe $2,500, and the insurance would pay $5,000. The lower your deductibles, the higher your premiums.

Does this all sound too confusing? We’ll be breaking it all down for you to help you understand. 

Home Insurance Deductible Quicklinks

What Exactly Is a Homeowners Insurance Deductible? 

When something is lost or damaged in a fire for example then whatever you agreed to pay for those items will be subtracted from their total cost and the rest will be covered by your home insurance. A higher deductible usually means a lower home insurance rate, whereas a lower deductible usually means a higher home insurance rate. 

What are common homeowners insurance deductible amounts?

A common homeowners insurance deductible is known as a flat deductible, which is $1,000. Typically, a common homeowners insurance deductible amount can range from $500-$5,000. You can always ask for higher deductibles if you want to save more on your premium. 

What are the two types of homeowners insurance deductibles?

You can either choose one of two options on how to pay your deductibles:

  1. Dollar amount deductible: This will define a specific dollar amount you agreed to pay out of pocket in a claim situation. For example, if you have a $1,500 deductible, that’s how much you would pay before your homeowner’s insurance covers the rest.
  2. Percentage-based deductible: A specific percentage of your home’s insured value to be the deductible. Typically between 1-5%. For example, if the policy states you have a 2% deductible, and your dwelling coverage is $150,000, you would have to pay $3,000 in the event of a claim. 

How to choose a deductible type and amount

When looking to find the right deductible for you, you’re going to have to take a look at your finances and consider the following questions:

  1. Lower home insurance: Would you rather take the risk of higher out-of-pocket expenses if disaster strikes, such as a burglary or fire? 
  2. Higher home insurance: Would you rather pay less out of pocket when filing a claim?

These two questions can help determine the type of deductible you might want to consider. As far as the amount goes, that’s completely up to you.

What are hurricane and named storm deductibles and how do they work?

If you live in a coastal state (such as Florida) where you get a lot of severe weather, you might have to pay seasonal instead of for each individual storm. This type of payment is called a hurricane and named storm deductible.

What is a wind/hail deductible and how does it work?

A wind/hail deductible is very much similar to hurricane and named storm deductibles in that they’re paid in mostly percentages, rather than dollar amounts. Typically, will find these types of deductibles in states in Tornado Alley, which includes Nebraska, Oklahoma, Kansas, and Texas). 

Deductibles and Filing a Home Insurance Claim

Now that you’ve learned all about homeowner’s insurance deductibles, we’ll be covering filing home insurance claims.

How to file a home insurance claim

When filing a home insurance claim it is important to take these steps, in order to make sure you and your home insurance company are on the same page. 

  1. Take photos of damaged items, and write summaries.
  2. Know your deductible amount. 
  3. Know the worth of your home before the damage. Try to avoid guessing.
  4. Call your home insurance company, or file a claim online.
  5. Make temporary repairs.
  6. Stay on top of your claim. Continue to check in with your home insurance company throughout the process.

What happens if the claim amount is lower than the deductible?

If the claim amount for the damaged items is lower than the deductible amount, your insurance company wouldn’t have to pay for anything. All of the expenses would come out of your pocket because that’s what you agreed to pay when you signed up for the deductible. 

When you shouldn’t file a home insurance claim

Here’s when you shouldn’t file a home insurance claim:

  • Repair or replacement costs for damaged items are close to or less than the deductible amount
  • If you’ve filed multiple claims in recent years
  • The claim is tied to something your home insurance policy doesn’t cover

Homeowner’s Insurance Deductibles and Premiums

We’ve explained deductibles, but premiums are also really important when it comes to homeowner’s insurance. Keep reading to learn more about premiums.

How does lowering your deductible affect your home insurance premium?

Lowering your deductible will increase the amount you pay on your premiums. If you live in an area unlikely to face damage, it may be smart to lower your deductible. But if you live in a high-risk area, a low deductible could put you at risk for extremely high costs if any storm damages your house.

Is a lower or higher deductible amount better?

There’s no one-size-fits-all answer. But we’ll give you some things to consider before you choose a home insurance deductible amount:

  • Costs: Do you want to pay less or more out of pocket when dealing with repairs or replacements? A lower deductible amount will allow you to have less cost risk, but pay more for any damages. A higher deductible amount will give you more out-of-pocket expenses in the event of damaged items but will save you money by helping you pay less for your home insurance. 
  • Risk: How much can you afford if a sudden event occurs and your personal belongings get damaged?
  • Information: Find out how your home insurance manages deductibles. 

Home Insurance Deductible FAQs

What does it mean when you have a $1,000 deductible?

If you have a $1,000 deductible on an item and it gets damaged, your deductible means you agree to pay up to $1,000 out of pocket for this item.

For example, let’s say a sound system is worth $5,000 and you had a $1,500 deductible on this item. In the event of a claim, the first $1,500 would be paid by you and the remaining balance of $3,500 would be covered by your insurance company. 

Can you claim your homeowner’s insurance deductible on your taxes?

No, the IRS will not allow you to claim your homeowners deductible on your taxes. 

Is a deductible the same as out-of-pocket?

Yes, your deductible is the amount of money you agree to pay out of pocket in the event of damaged personal property.

Do I have to pay a deductible for my home insurance if the claim wasn’t my fault?

Yes, for example, severe weather is nobody’s fault, but that’s why you have home insurance to help you repair or replace the items that were damaged in a sudden event. You would only owe what you agreed to pay in your deductible, and your home insurance company would cover the rest. 

Is it better to go through insurance or pay out-of-pocket?

If expenses are going to cost less than what your deductible is, then it’s better to pay out of pocket. If the damaged items are more expensive than your deductible, then it would be better to file an insurance claim. 

Finding the Right Policy and Deductible

Finding the right homeowner’s insurance deductible is challenging, and so is finding the right insurance company and policy. We have a tool that makes it easy to compare homeowner’s insurance policies. Don’t hesitate to find the best policy for you.