Choosing a Homeowners Insurance Deductible


WRITTEN BY: Mark Romero

UPDATED: SEPTEMBER 23, 2022 | 1 MIN READ

Your insurance deductible is the money you agree to pay before your insurance provider pays a claim. Choosing the right deductible is important to get 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 homeowners insurance policy, 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 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 right home insurance deductible for you depends on your financial situation. If you have the extra money in the bank, choosing a higher deductible to pay a lesser premium might be good.

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

When do you pay the deductible for home insurance?

A deductible must be paid every time you claim 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, your premium will be higher; if you want a low one, you will choose a higher one.

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 is a fixed dollar between $500-$2,500. The amount you pay as a deductible is always the same.
  • Percentage Deductible: This 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 homeowners policy. Hurricane deductibles are usually higher than normal homeowners policy deductibles. You can still pay 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.

FAQs

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

It 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 homeowners 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’s if you can afford to pay $2,500 out of pocket if you need to file a claim. You will have a low premium with a high deductible, which might be exactly what you’re looking for. 

What should my home insurance deductible be?

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 homeowners policies offer a waiver of deductible if there is a significant loss. That’s usually the case if a fire destroys your home. You won’t have to pay the deductible if the loss exceeds a certain amount.

Getting Good Home Insurance

A homeowners insurance deductible is an amount you pay out of pocket if you claim 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, you must get home insurance quotes from multiple companies to ensure you get the best rates.