What Is a Homeowners Insurance Deductible?
 Written by Dylan Tate Dylan TateDylan Tate is an insurance content expert for SmartFinancial with 70+ articles about home, auto and life insurance under... Read more |  Edited by Dan MarticioDan MarticioDan Marticio is the content manager at SmartFinancial and has written 150+ articles across multiple insurance verticals.... Read more |
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Your homeowners insurance deductible is the amount of money you have to pay out of pocket before your insurance provider will start contributing money toward a claim. Setting a high deductible will lower your premiums but will also leave you on the hook for a greater portion of the costs whenever you file a claim.
Read below to learn more about home insurance deductibles such as when different types of deductibles apply and what deductible you may want to set for your policy.
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Key Takeaways
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How Do Home Insurance Deductibles Work?
In homeowners insurance, a deductible is a predetermined amount of money you are responsible for covering out of pocket on every home insurance claim. The higher your deductible is, the lower your premiums will be since it means your insurance company pays less anytime you experience a covered loss.
Deductibles exist to help keep home insurance prices stable by discouraging unnecessary claims. For example, if you have a $500 deductible, there is no point in filing a claim for $300 worth of repairs since the cost would not exceed your deductible. Even if your home needs $800 worth of repairs, you may still decide against filing a claim because the potential increase to your homeowners insurance rates may not be worth the immediate $300 savings.
Keep in mind that not every type of homeowners insurance claim requires a deductible. You will generally have to pay a deductible on dwelling, other structures and personal property claims but you may not have to for loss of use, personal liability or medical payments claims.[1]
Who Pays for the Deductible?
Rather than directly paying a deductible to your insurance company, the deductible is instead subtracted from your insurance payout after your claim is approved. For example, if your home incurs $20,000 worth of damage during a fire and you have a $1,000 deductible, your insurer will pay you $19,000.
What Types of Homeowners Insurance Deductibles Are There?
There are two major types of deductibles that can apply to a homeowners insurance policy: fixed and percentage deductibles. You may be able to select the type of deductible you would like for your policy or the type that applies may vary depending on your location and the peril that has impacted your home.
Fixed Deductible
The most common type of home insurance deductible is a fixed or flat deductible.[2] With this standard deductible type, you will be responsible for covering a set amount of money for every claim. For example, if you select a fixed deductible of $2,000, then you will have to cover the first $2,000 of every claim yourself regardless of your policy’s coverage limits.
Percentage Deductible
Conversely, if you have a percentage deductible, the amount of money you have to pay out of pocket will be set at a percentage of your dwelling coverage limit. For example, if your policy includes $300,000 worth of insurance coverage for the structure of your home and you have a 2% percentage deductible, then you will have to cover $6,000 out of pocket every time you file a claim.
Split Deductible
If you have a split or hybrid deductible, then you may have to pay either a flat deductible or a percentage deductible depending on the type of claim you file. Generally, you will pay a percentage deductible for claims related to specific perils like wind and hail, while a flat deductible will apply to all other claims.
Your homeowners insurance company will likely only require you to pay a percentage deductible on claims related to certain perils if your region is prone to severe damage from those perils. For example, percentage-based deductibles apply to hurricane claims for homeowners throughout the southern and eastern parts of the United States and in Hawaii.[3]
What Are Disaster Deductibles?
You may have to pay a special deductible on claims related to natural disasters even if they are covered by a standard homeowners policy. Meanwhile, you may have to purchase separate insurance policies for natural disasters that are excluded from standard homeowners coverage, with these policies requiring deductibles as well. See the below table for an overview of disaster deductibles and relevant information surrounding them.
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Natural Disaster |
Covered by Standard Insurance |
Typical Deductible Ranges |
Additional Notes |
|---|---|---|---|
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Hurricane |
Yes, but may be excluded depending on your location |
1% to 10% of your dwelling coverage limit or higher[3] |
Special deductible usually applies to tropical storms that have been named by the National Weather Service[3] |
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Windstorm |
Yes, but may be excluded depending on your location |
1% to 5% of your dwelling coverage limit[3] |
Special deductible applies to windstorms other than hurricanes[3] |
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No |
2% to 20% of your dwelling coverage limit[4] |
Minimum deductible may be set at 10% of your dwelling coverage limit in earthquake-prone states like Washington, Nevada and Utah[4] |
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|
No |
$1,000 to $10,000 through the National Flood Insurance Program (NFIP)[5] |
Building claims and contents claims require separate deductibles[6] |
While you normally have to pay your deductible every time you file a claim, homeowners in Florida generally only need to pay one hurricane deductible per year even if they file multiple claims. However, subsequent claims may require you to pay a standard deductible or the rest of your hurricane deductible if you didn’t fully meet it through your first claim.[7]
Note that this means you should always file an insurance claim after a hurricane damages your home in Florida even if the repair costs wouldn’t exceed your deductible because your insurance carrier needs to keep track of how much of your deductible is left for the year.[7]
What Is a Normal Deductible for Homeowners Insurance?
The most common flat deductible is $1,000, although $500 and $2,000 are also common options for homeowners whose policies come with fixed deductibles.[8] That said, you are usually allowed to opt for an even higher insurance deductible if you so choose.
How Do I Choose the Right Home Insurance Deductible?
To determine the right home insurance deductible for your policy, you need to consider how likely you are to file a claim and how much money you would feel comfortable spending at one time. For example, a higher deductible may be better if you don’t anticipate filing multiple claims in the near future or if you have plenty of money saved up in case of an emergency and would prefer to save money on your regular premium payments.
Conversely, a lower deductible may be better if you live in a high-risk area where you could see yourself filing multiple claims or if you couldn’t afford to pay more than $1,000 out of pocket due to a sudden loss and would rather budget for higher premium payments.
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Dylan Tate is an insurance content expert for SmartFinancial with 70+ articles about home, auto and life insurance under his belt. He has over seven years of experience writing for online publications, primarily about gaming and esports. In the process, he has become an expert in search engine optimization, news reporting, feature writing and copy editing.
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