Standard Home Insurance Deductibles
This is the amount you are responsible to pay out of pocket before your homeowners’ insurance policy takes effect and covers an insurable loss. The amount of your standard deductible is chosen by you when selecting your insurance (subject to a minimum), thereby giving you control over your monthly premiums. In the event of an insured claim, your agreed deductible will be deducted from your payment, with the balance being paid by your insurer (up to a maximum limit stated in your policy).
For example, if you make a theft claim for $1,200 and your standard deductible is $500, your insurer will first deduct your share of the claim, in this case $500, and payout the balance of $700 as settlement of your claim, leaving you with the shortfall of $500 to pay out of pocket.
Deductibles allow risk to be shared between you and your insurer and attempts to keep premiums affordable by deterring small claims which are costly to process. The larger the deductible you choose, the lower your premiums tend to be, as your risk is greater, but at the same time your settlement payout will be less too. Therefore, it’s important to be comfortable with the trade-off you’re making and choose a deductible that you will be able to afford at the time of a claim.
A deductible can be expresses as either a fixed amount or a percentage of the total insured value and can be found on the declarations page of your homeowners’ insurance policy. The Standard Deductible amount applies to most property claims you file, whether it’s for theft, windstorms, fire or hail. There are some exceptions to this, such as a hurricane deductible, an earthquake deductible, and a flood deductible, which are itemized as separate deductibles in most insurance policies.
Note that deductibles are payable each time you file a claim and generally apply to property damage and not to the liability portion of a homeowner’s policy. It’s worth remembering that your homeowners insurance premiums are affected by your claims history, so where you are able to cover the loss out of pocket you should consider doing so, in order to prevent unnecessary increases in your future premiums.
Be sure to read your policy and understand the terms, conditions and exclusions in your policy. By understanding how deductibles work, you are able to tailor your insurance coverage to suit your needs and prevent any surprises at the time of filing a claim.