Filing a home insurance claim can be stressful. In addition to your home being damaged, you also have to pay a deductible before your insurance kicks in. Fortunately, you get to choose your deductible amount beforehand. So what is a good deductible for home insurance?
What Is a Home Deductible
Every home insurance policy comes with a deductible. This is the amount of money you pay out of pocket toward repair or replacement costs when you file a claim. Your home insurance carrier will then cover the remaining expenses, up to your coverage limit.
A deductible is separate from your insurance premium, which you pay every year to your insurance carrier whether you file a home claim or not. In most cases, you’ll pay your deductible amount directly to the contractor repairing your home.
When a Deductible Applies
A deductible will apply on most home insurance claims. That’s because most claims are made against the dwelling, personal property and other structures coverages within your home policy. Other types of coverages do not have deductibles, including personal liability and medical payments. If a specific coverage or peril does not have a deductible, it will be stated in your policy.
| Coverages With Deductibles | Coverages Without Deductible |
| Dwelling | Personal Liability |
| Personal Property | Medical Payments |
| Other Structures |
Additionally, some home insurance policy endorsements, riders and scheduled personal property (e.g., jewelry, furs, etc.) don’t have a deductible.
Average Home Insurance Deductible
Standard homeowners insurance deductibles often range from $500 to $2,000, although they can be higher or lower depending on your insurance carrier and budget. With a standard flat deductible, the amount you pay out of pocket typically won’t change over time unless you modify your home insurance policy. Percentage deductibles change as your home’s insured value changes.
Deductible Types
When it comes to deductibles, homeowners can either pay a flat amount or a percentage of their home insurance coverage. Here’s the difference.
- Flat deductible – You pay a fixed dollar amount—such as $500 or $1,000—each time you file a home claim. This is the deductible type most people are familiar with, as it applies to most home policies. A flat deductible will stay the same, no matter the cost of the damage to your home.
- Percentage deductible – You pay a percentage of your home’s insured value—typically between 1% and 10%. So, if your home’s insured value is $400,000 and comes with a 2% deductible, you would pay $8,000 out of pocket when filing a claim. These deductibles usually apply to specific weather-related home claims like wind, hail or hurricanes.
Specialty insurance policies, which cover natural disasters like earthquakes and floods, also have deductibles. These policies are separate from your standard home insurance policy.
High vs. Low Deductible
As a homeowner, you get to decide how much you want your homeowners insurance deductible to be. A higher deductible means you’ll pay more upfront before your insurance pays out the remainder of the claim. As a reward, your insurance company will often lower your annual premium.
On the other hand, a lower deductible minimizes your out-of-pocket responsibility for covered home claims, but usually results in a higher annual premium.
| Higher Deductible Amount |
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| Lower Deductible Amount |
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Choosing a Deductible
When choosing a home insurance deductible, it’s important that you consider your financial situation. If you can comfortably afford more out-of-pocket costs, you might want to choose a higher deductible amount—say, $2,000 or more—to secure a lower annual insurance premium.
On the other hand, if you don’t have money saved to cover unexpected expenses like a deductible, you may want to choose a lower deductible until you can build that emergency fund up. Just remember that a lower deductible also requires paying a higher premium.
Either way, it’s a smart idea to get a few quotes with different home insurance deductibles to compare premium rates. For instance, if there isn’t a big difference in your premium between a $1,000 and $2,000 deductible, you may want to pick the lower one.
How a Deductible Works
If you file a homeowners insurance claim, you should pay your deductible after you receive a settlement amount from your insurance carrier. Here are some general steps in the claims payment process:
Examples
Let’s assume that your insurance company approves your home claim for $10,000 in damages to your roof and that your deductible is $2,000. In this scenario, you would pay for the first $2,000 in expenses and your insurance carrier would cover the remaining $8,000.
Here are some more scenarios:
| Your Deductible | Amount of Damage | Amount Your Insurer Pays | Amount You Pay |
| $1,000 | $20,000 | $19,000 | $1,000 |
| $1,500 | $14,500 | $13,000 | $1,500 |
| $3,000 | $9,750 | $6,750 | $3,000 |
What happens if you have a claim and the cost of repairs is less than your deductible?
In this case, there’s no need to file a claim. You would just pay the contractor out of pocket and your insurance company wouldn’t pay anything.
What happens if the cost of repairs isn’t much higher than your deductible?
Let’s say that a fallen tree limb causes $6,000 worth of damage to your roof, and you have a $5,000 deductible on your home policy. Under these circumstances, you may not want to file a claim for two reasons:
- Not filing a claim will keep you eligible for a Claims Free discount.
- Generally speaking, you may see a surcharge on your home insurance premium for the next five years if you file a claim. Therefore, it may not make financial sense to file the claim just to save $1,000.
What happens if I file more than one claim in a year?
Your home insurance deductible applies to each claim. So, if you file multiple claims in one year, you must pay the full deductible amount each time before your policy benefits kick in. The deductible will be applied for every separate occurrence.
