A home insurance policy deductible is the amount agreed upon by you to contribute towards a claimed loss. Most homeowners insurance companies allow you to choose between a percentage or flat deductible.
Deductibles can affect your insurance premium. There are many reasons for choosing one over the other. You can save money by increasing your deductible, but in the event of an accident you are responsible for a greater portion of the cost.
How a Homeowners Deductible Works
The average deductible of home insurance can be $500 but it may be higher. You can choose a deductible based on your personal circumstances and financial goals. Your agent can help you determine the right deductible for both your budget and situation.
The amount of your homeowners deductible that you will be responsible for paying in the event of a disaster can also affect how much money you have to spend on repairs. The average hurricane, wind and hail damage deductible ranges between 10%-20% of your home’s insured value. However, it can vary by states.
How does the deductible on your home insurance affect your premiums?
Higher deductibles usually result in lower insurance rates, but they can also make you responsible for more of the costs of repairs following a disaster. Insurance companies also tend to lower premiums for policyholders that take on more risk when filing a claim.
Doing your research is essential to choosing a homeowners deductible which suits you and your budget. Consider your financial situation and location, as well as the size of losses that you might experience in the near future, when deciding on the amount of deductible.
It is important to choose a reasonable deductible so that you are not left in debt following a hurricane or other natural disaster. When you know how much you can spend on a deductible, begin saving for it in a separate bank account.
Set aside a part of your deductible if you own a garage, or store items in a separate area. You can avoid having to dip into your savings for a costly repair and stay financially stable in the long term.
It's important to set your deductible alongside your premium. That way, you can decide whether the added risk is worth it. Before making any decisions, it's best that you compare home insurance rates and see how a higher deductible can affect your premiums.
What are some of the most common home-insurance deductibles that you may encounter?
Home insurance deductibles are the amounts you must pay yourself each time you need to make a payment. Some homeowners opt for a fixed, dollar-based deductible that applies to every claim, while others prefer a percentage-based deductible that requires you to pay a certain amount each time you file a claim.
There are many options available, but the most popular are $500 and $1,000. You should discuss your options with an agent before signing anything.