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Choosing a Home Insurance Deductible

WRITTEN BY: Mark Romero

UPDATED: MAY 30, 2022 | 3 MIN READ

Your insurance deductible is simply the money that you agree to pay before your insurance provider pays a claim. Choosing the right deductible for you is an important part of getting the best insurance policy value. This guide explains how to get the most affordability from your policy, choosing a good home insurance deductible, and the importance of getting different home insurance coverage quotes.

Home Insurance Deductible Explained

If you have a deductible with your homeowner’s insurance policy, then it must be paid before your insurance company pays a claim on damaged or stolen property. Most policies come with a deductible, but the deductible amounts can differ. For example, you could choose from deductible amounts ranging from $500 to $2,500.

Some companies will offer a home insurance deductible as a percentage. For example, if your home is insured for up to $400,000 and your deductible equals 1% of the coverage limit, you would pay a $4,000 deductible.

What’s a good home insurance deductible?

Determining the home insurance deductible that’s right for you depends on your financial situation. If you have the extra money in the bank, it might be good to choose a higher deductible so you pay a lesser premium.

If you are on a budget, it’s best to have the lowest deductible possible, which requires paying a higher premium. 

What’s the average home insurance deductible?

The average homeowner’s deductible is a flat rate of $1,000. Other common amounts are $500 and $2,000. If you want to save more on your premium, you can choose a higher deductible amount.

When do you pay the deductible for home insurance?

A deductible must be paid every time you make a claim on your home insurance coverage. It’s an amount that was agreed upon when you signed up for your policy. You typically must pay the deductible before your insurance company completes the claim and makes its payout.

How Does My Home Insurance Deductible Affect My Premium?

An insurance premium is what you pay monthly or yearly for your home insurance coverage. Risk is a big part of what determines your premium. The higher the risk, the higher your premium.

Your deductible affects the cost of your premium. If you want a low deductible, then your premium will be higher, and if you want a low premium, you would choose a higher deductible.

Does My Homeowner’s Deductible Affect My Home Insurance Coverage?

No the deductible you choose doesn’t affect your home insurance coverage, only the rates. 

Types Of Homeowners Insurance Deductibles

There are two types of home insurance deductibles.

  • Standard Deductible – This deductible is a fixed dollar amount in the range of $500-$2,500. The amount you pay as a deductible is always the same.
  • Percentage Deductible – This deductible is typically used for hail, wind, or hurricane-related claims. The deductible you pay is a percentage of your home’s insured value.

Hurricane Deductibles

If you live in a hurricane-prone state, there might be special deductibles on your homeowner’s policy. Hurricane deductibles are usually higher than normal homeowner’s policy deductibles. You still have the option of paying a higher premium to get a lower deductible, however, in high-risk areas, insurers may insist on a percentage deductible.

Flood Insurance Deductible

Flood insurance deductibles also vary depending on the insurance company and your state. You can get a fixed amount or percentage deductible. You have the option of choosing a different deductible for the contents of your home as well as your home structure.

Home Insurance Deductible FAQs

Is it better to have a high or low home insurance deductible?

It all depends on your financial situation. The lower the premium, the higher your deductible. Ideally, you want to make sure you can afford to pay the deductible if you have to file a claim.

What’s the highest home insurance deductible you can have?

A homeowner’s deductible doesn’t typically go above $2,500. On average, deductibles can range between $500-and $1,000. You have the option to choose the deductible that you want when you purchase a policy.

Is a $2,500 deductible good home insurance?

It is if you can afford to pay $2,500 out of pocket in the event you need to file a claim. By having a high deductible, you will have a low premium which might be exactly what you are looking for. 

What should my home insurance deductible be?

On average, a homeowner will choose a flat rate of $1,000 deductible. This is a standard rate, but you can choose a lower or higher rate to suit your needs.

How to avoid paying a home insurance deductible?

Some homeowner’s policies offer a waiver of deductible if there is a significant loss. That’s usually the case if a fire destroys your home. If the loss is over a certain amount, you wouldn’t have to pay the deductible.

Getting Good Home Insurance

A homeowners insurance deductible is an amount of money that you pay out of pocket if you make a claim on your home. The higher the deductible, the less you pay as a premium, and vice versa. When you determine how much you want to spend on a deductible, it’s important to get home insurance quotes from multiple companies to ensure you get the best rates.

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