A home insurance deductible is the portion of a covered loss you’re responsible for paying. Think of it as your share of the repair costs. Instead of you paying the insurer directly, the company typically deducts this amount from your total claim payout.
For example, if a fire causes $10,000 of covered damage and you have a $1,000 deductible, your insurance company will issue a check for $9,000.
What is a home insurance deductible?
A homeowners insurance deductible is the amount of covered damage or loss you are responsible for paying out of pocket. This amount is usually subtracted from your total claim check.
Deductibles help insurers manage risk and keep your premium — the total amount you pay for your insurance policy — more affordable. Generally, the higher your deductible, the lower your premium will likely be. According to the Insurance Information Institute, increasing your deductible from $500 to $1,000 could save you as much as 25% on your policy cost.
How home insurance deductibles work
A standard policy is actually made up of several different buckets of protection. While your deductible applies to most damage involving your physical property, it doesn't apply to everything.
Your deductible will typically apply to:
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The home’s physical structure: Repairs to the house itself fall under dwelling coverage, or Coverage A.
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Detached structures: Damage to fences, sheds, or garages falls under other structures coverage, or Coverage B.
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Your belongings: Theft or damage to furniture, clothes, and electronics falls under personal property coverage, or Coverage C.
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Additional living expenses: Costs if you have to live elsewhere during repairs fall under loss of use coverage, or Coverage D.
In contrast, personal liability and medical payments coverage, which cover claims involving injuries or property damage to others, typically do not have a deductible.Â
When do you have to pay a home insurance deductible?
For homeowners claims, you usually don’t have to pay a deductible directly to the insurance company. Instead, the insurer deducts it from your claim payout. You’ll then pay the deductible amount to your contractor as part of the repair costs. Your insurer pays the remaining balance, up to your policy limits.
Types of home insurance deductibles
Home insurance policies typically fall into one of two categories.
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Standard deductible: A flat deductible is a fixed dollar amount, such as $500 or $1,000, that applies to most covered claims.
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Percentage deductible: A percentage deductible is calculated as a percentage of your dwelling coverage amount, typically 1% to 5%, and applies to destructive weather events like hurricanes and tornadoes. For example, if your home is insured for $300,000 and you have a 2% hail deductible, you’d be responsible for the first $6,000 of damage caused by hail.Â
Disaster home insurance deductible
Some high-risk events have separate deductibles, which often fall into the percentage-based category (but not always). Here are a few of the most common disaster-related deductibles.
Flood insurance deductible
Standard home insurance does not cover flood-related claims. Food insurance is optional for many homeowners, but if you live in a flood-prone area, your mortgage lender might require it. You may be able to secure flood coverage as an add-on, or you might have to purchase a separate flood policy.
Flood insurance will have a standard or percentage deductible. You can usually choose a different deductible for the structure of your home and your personal property. Deductible types and amounts vary by insurer and state.
If you have a mortgage, your lender may set a maximum deductible for a flood insurance policy.
Earthquake deductible
Earthquake deductibles are usually percentage-based and significantly higher than standard deductibles, ranging from 5% to 25% of your dwelling coverage amount. High-risk states like Nevada, Utah, and Washington may only offer a minimum deductible of 10%.
Certain insurers offer earthquake coverage as an endorsement to your homeowners policy. However, you might need to purchase a separate earthquake insurance policy in some instances. You may be able to choose a separate deductible for your home and personal belongings.
Hurricane deductible
In hurricane-prone states, a separate hurricane deductible may apply when damage is caused by a named hurricane or when specific storm conditions are met. Deductibles are usually higher than standard deductibles, though some insurers allow flat-dollar options.Â
The exact trigger for when a hurricane deductible applies varies by state and insurance company. In high-risk coastal areas, percentage-based hurricane deductibles may be mandatory.
Wind and hail deductibles
In certain states, especially in coastal areas, a separate wind and hail deductible may apply to damage caused by strong winds and hail. These are often percentage deductibles ranging from 1% to 5% and can result in higher out-of-pocket costs after major storms.
How to choose the right deductible for home insurance
Choosing the right deductible for home insurance comes down to a few factors:
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How much you can comfortably pay in an emergency
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Your savings and financial stability
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Your claim history
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The age and condition of your home
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Where you live and what types of claims you’re susceptible to
If you rarely file claims, have substantial savings, and don’t live in a disaster-prone area, a higher deductible may make sense. But if unexpected expenses are challenging to manage, a lower deductible may be a safer choice.
How does your deductible affect your home insurance rates?
In general, higher deductibles lower your home insurance premiums, and lower deductibles raise your rates. While raising your deductible means you’ll pay less for home insurance, it increases your financial responsibility if something goes wrong.
Your deductible is just one of many factors that determine your home insurance rates. If you’re not sure what deductible makes sense, ask your insurance company to give you a home insurance quote for different deductible amounts. Seeing the premium difference can help you decide which is best for you.
What’s the average home insurance deductible?
Most homeowners choose a $500 or $1,000 deductible for standard claims and lower percentage deductibles for disaster claims. The right deductible varies depending on your location, insurer, and personal financial situation.
Frequently asked questions
What if my home repair costs less than my home insurance deductible?
If the cost of repairs is less than your deductible, then your insurance company won’t pay anything for the claim. You will be responsible for funding repairs or replacements yourself.
