How Does a Home Insurance Deductible Work?
What is a Home Insurance Deductible?
A homeowners insurance deductible is the amount you pay out of pocket for a covered property or dwelling loss. It does not apply to liability claims. Typically, you will have several deductible levels from which to choose.
For example, let’s say a storm causes damage to your roof.
| Cost for repairs: | +$12,000 |
| Your deductible: This is what you pay. |
-$1,000 |
| Your insurer will pay: | =$11,000 |
Using the example above, if the cost to fix your roof is $900, you would pay the entire bill.
Types of Home Insurance Deductibles
Deductibles typically range from $500 to $2,500. However, some insurers may offer percentage deductibles based on your home’s value for specific storm-related claims such as hail. For example, if your home is worth $400,000, a 1% deductible would be $4,000.
How Deductibles Affect Your Insurance Premiums
Your deductible amount affects what you pay for your insurance premium.
Choosing a higher deductible will lower your premium but incur higher out-of-pocket costs when you submit a claim. A lower deductible will raise your premium and reduce the out-of-pocket claim cost.
It is important to remember that if the amount of damage is less than your chosen deductible, the policy will not respond.
Choosing the Right Deductible
It is a good idea to talk with your insurer to better understand your homeowners insurance coverage, the impact a lower or higher deductible will have on your premium, and your costs in the event of a claim submission.