Home Insurance Deductibles Explained
Your home insurance deductible is the amount you pay out of pocket before your insurance kicks in. Choosing the right deductible can significantly affect your premium.
What Is a Home Insurance Deductible?
A deductible is the amount you agree to pay toward a covered claim before your insurance company pays the rest. For example, if you have a $1,000 deductible and file a $10,000 claim, you pay $1,000 and your insurer pays $9,000.
Standard Deductibles vs. Percentage Deductibles
Standard deductibles are a fixed dollar amount — typically $500, $1,000, or $2,500. Percentage deductibles are calculated as a percentage of your home's insured value — commonly 1% or 2%. Percentage deductibles are often used for wind and hail damage in storm-prone areas.
How Your Deductible Affects Your Premium
Choosing a higher deductible lowers your premium. Moving from a $500 to a $1,000 deductible can reduce your annual premium by 10–20%. Moving to a $2,500 deductible can save even more. The trade-off is that you'll pay more out of pocket when you file a claim.
What Deductible Should You Choose?
Choose a deductible you can comfortably afford to pay out of pocket. If you have a solid emergency fund, a higher deductible makes sense and will save you money on premiums. If you'd struggle to cover a $2,500 expense, stick with a lower deductible.
When Not to File a Claim
Filing small claims can raise your rates or even lead to non-renewal. If the damage is only slightly above your deductible, it may be better to pay out of pocket. AG Insurance can help you think through whether to file a claim in any given situation.
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