For most homeowners, a good deductible is typically between $1,000 and $2,500. However, the best deductible for you depends on your financial situation and the likelihood that you will file a claim. It’s important to determine how much you can comfortably pay out of pocket in the event of a claim.
What is a home insurance deductible?
A home insurance deductible is the amount you pay out of pocket before your insurance company covers the remaining cost of a claim up to your coverage limit. For example, if you have a $1,000 deductible and $10,000 in covered damage:
- You pay $1,000
- Your insurer pays $9,000
A deductible is separate from your insurance premium, which is the amount you pay annually to keep your home insurance policy active. In most cases, you’ll pay your deductible amount directly to the contractor repairing your home.
When does a deductible apply?
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 deductible | 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.
What is an 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.
Are there different types of home deductibles?
Homeowners can either pay a flat deductible or a percentage deductible. With a flat deductible, you pay a fixed amount. With a percentage deductible, you pay a percentage of your home’s insured value.
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
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
A higher deductible means you’ll pay more upfront before your insurance company pays the remainder of the claim. As a reward, your insurer will often lower your annual premium. A lower deductible minimizes your out-of-pocket responsibility for a covered home claim, but usually results in a higher premium.
Follow these guidelines to determine how much you want your homeowners insurance deductible to be:
| Higher deductible amount | Lower deductible amount |
|---|---|
| Lower annual premium | Higher annual premium |
| Higher out-of-pocket amount if there’s a claim | Lower out-of-pocket amount if there's a claim |
How to choose 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.
When do I pay the deductible?
You typically pay your homeowners insurance deductible after your claim is settled. The deductible is either subtracted from your claim settlement, or you can pay it directly to the contractor repairing the damage.
Here’s how the claims payment process might work if a contractor is involved:
Step 1
Homeowner files a home claim with their insurance carrier.
Step 2
Insurance carrier evaluates all covered damages.
Step 3
Insurance carrier sends the homeowner a claim check for the cost of the damage minus the deductible.
Step 4
Homeowner pays the deductible amount to their contractor, as they are the ones repairing the damage to the property.
Home deductible examples
Let’s say 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 deductible examples:
| 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 | $3,000 | $6,750 |
What happens if you have a claim and the cost of repairs is less than your deductible?
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.
- You may see a surcharge on your home insurance premium for the next several 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?
If you file multiple claims in one year, you must pay the full deductible amount each time before your policy benefits kick in. Your home insurance deductible applies to every separate claim.