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The best homeowners insurance policies offer vital financial protection if a fire, natural disaster or other event damages your home.
Home insurance has deductibles. You’re responsible for paying the policy’s homeowners insurance deductible when you file an approved home insurance claim. A deductible typically ranges between $250 and $1,000, or sometimes more, depending on your policy.
What Is a Home Insurance Deductible?
A home insurance deductible is the amount an insurance company reduces from the payment of a claim.
For example, if you file a homeowners insurance claim for $5,000 worth of damage and your policy has a $500 deductible, the insurance would reduce its payment to $4,500.
Many deductibles are calculated in specific dollar amounts, such as $500 and $1,000. In other cases, your deductible may be a percentage of your policy’s coverage amount. This type of deductible is common with specific types of coverage, such as hurricane insurance and earthquake insurance.
Deductibles only apply to the property damage portion of your homeowners insurance policy. They don’t apply to a policy’s liability home insurance, which covers you for damages to another person or property for which you’re responsible.
Shopping around and comparing homeowners insurance quotes with several of the best homeowners insurance companies is the most effective way to find the deductible and premium costs that best meet your needs.
Related: Is Homeowners Insurance Tax-deductible?
What Is the Average Deductible Cost for Homeowners Insurance?
The average cost of a $500 deductible for a $350,000 home insurance policy is $1,710. By increasing that deductible to $1,000, you can save $115 annually on average. Raising it to $1,500 or $2,000 may lower your premium even more.
Here’s a look at the average home insurance costs for a $350,000 home insurance policy by a deductible to help you find the cheapest homeowners insurance companies.
Average home insurance costs by deductible
| Deductible | Average annual home insurance cost | |
|---|---|---|
| $250 | $1,769 | |
| $500 | $1,710 | |
| $1,000 | $1,595 | |
| $1,500 | $1,522 | |
| $2,000 | $1,441 | |
| Source: Quadrant Information Services. Averages are for $350,000 worth of dwelling coverage. | ||
Here’s how much you could save by increasing your home insurance deductible.
Savings by increasing your deductible
| Increasing deductible from… | Dollar savings | Percentage savings | ||
|---|---|---|---|---|
| $500 to $1,000 | $115 | 7% | ||
| $500 to $2,000 | $269 | 16% | ||
| Source: Quadrant Information Services. Averages are for $350,000 worth of dwelling homeowners insurance coverage. | ||||
Home insurance companies differ by how much they charge for deductibles. Here’s a look at the average homeowners insurance costs by company, depending on the deductible.
Average annual rates by home insurance company based on deductible
| Company | $500 deductible | $1,000 deductible | Dollar savings by increasing deductible from $500 to $1,000 | |||
|---|---|---|---|---|---|---|
| Allstate | $1,446 | $1,327 | $118 | |||
| American Family | $1,541 | $1,495 | $46 | |||
| Auto-Owners | $1,715 | $1,645 | $70 | |||
| Chubb | $2,003 | $1,717 | $286 | |||
| Country | $2,530 | $2,283 | $247 | |||
| Erie | $1,484 | $1,378 | $106 | |||
| Farmers | $2,008 | $1,885 | $123 | |||
| Nationwide | $1,347 | $1,309 | $38 | |||
| Progressive | $770 | $746 | $24 | |||
| Shelter | $2,680 | $2,337 | $343 | |||
| State Auto | $1,555 | $1,516 | $38 | |||
| State Farm | $1,588 | $1,475 | $113 | |||
| Travelers | $2,495 | $2,404 | $91 | |||
| USAA | $1,324 | $1,249 | $76 | |||
| Westfield | $1,164 | $1,164 | $0 | |||
| Source: Quadrant Information Services. Averages are for $350,000 worth of dwelling homeowners insurance coverage. | ||||||
Your location also influences how much you pay for home insurance. Here are the average homeowners insurance costs by state, depending on the deductible.
Average annual home insurance rates by state based on deductible
How Do Home Insurance Deductibles Work?
After you file a claim, the home insurance company reviews the loss and offers a claim payment minus the deductible amount.
Imagine you have a $1,000 deductible on your homeowners insurance policy, and a severe storm causes $30,000 in damages to the home. At that point, your insurer would cut you a claim check for $29,000.
The situation is slightly different if you have a percentage deductible. Let’s say your deductible is 2%, the home is insured for $300,000, and you suffer the same $30,000 in damages from the severe storm. In this case, your insurer would issue a claim check for $24,000.
What Are Types of Homeowners Insurance Deductibles?
The two main types of deductibles are a flat—or dollar amount—deductible and a percentage deductible.
What is a flat or dollar amount deductible?
A flat deductible is often $250, $500 or $1,000 and your home insurance company reduces the claim payment by that deductible.
If you suffer damages of $10,000 to your home due to an event covered in your homeowners insurance policy and you have a deductible of $500, the home insurance company will cut you a check for $9,500 in damages.
What is a percentage based deductible?
A percentage deductible is a specific percentage of your policy’s total coverage amount.
If you suffer damages of $10,000 to your home due to an event covered in your homeowners insurance policy and you have a 2% deductible and $200,000 in coverage, the insurer will cut you a check for the remaining $6,000 in damages.
What Is a Disaster Deductible?
A “disaster deductible” applies when certain natural disasters, such as hurricanes, earthquakes and floods, damage your home.
These deductibles may apply to policies separate from the homeowners policy. For example, you typically must purchase a separate flood insurance policy if you want coverage in the event of a flood. The same may be true of earthquakes.
In other cases, the deductible is part of your homeowners policy but is separate from the main deductible for that policy.
For example, your homeowners policy might have a $1,000 deductible and a separate deductible of 2% for hurricanes. That means any damage from a hurricane would come with the 2% deductible, not the $1,000 deductible.
Hurricane deductibles
A hurricane deductible is most common in areas prone to hurricanes. In many cases, this type of deductible applies whenever certain triggers occur, such as the National Weather Service declaring a hurricane watch or warning.
Nineteen states allow hurricane deductibles, including states along the eastern seaboard, Gulf Coast and Hawaii.
Hurricane deductibles usually are based on a percentage rather than a dollar amount, though you might be able to get a flat deductible if you agree to pay higher premiums.
Earthquake deductibles
Earthquake deductibles typically range from 2% to 20% of a home’s replacement value, according to the Insurance Information Institute. To get coverage for temblors, you usually have to purchase a separate earthquake insurance policy.
Flood Insurance
Flood coverage is available with either a flat deductible or a percentage deductible, depending on where you live and your flood insurance company.
You also may choose one deductible for your home and another for your personal property.
Hail and windstorm deductibles
A hail and windstorm deductible is similar to the deductible for hurricanes. States that experience strong storms, including Kansas, Nebraska, Ohio, Oklahoma and Texas, may have this deductible, according to the Insurance Information Institute.
These deductibles are usually percentage deductibles and range from 1% to 5%.
How to Choose the Right Homeowners Insurance Deductible
In most cases, the higher deductible you choose, the lower your insurance premiums. The higher deductible means the home insurance company pays less when you file a claim.
If you agree to a higher deductible, you typically can save money over the life of your policy. But it’s important to know that if you file a claim, you won’t get as much from the insurance company.
Also, remember that a percentage deductible can be rather costly to pay.
You should never choose a higher deductible that you’re willing or able to pay, regardless of how much a higher deductible saves you in premium costs.
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Homeowners Insurance Deductible FAQs
How do deductibles affect premiums?
The home insurance deductible you pay directly influences premiums. As a general rule, the higher your deductible, the lower your premium.
This means that agreeing to a higher deductible can save you money over the lifetime of a policy. This is especially true if you rarely or never make claims.
If you make a claim, the insurance company pays less, and you either need to pick up the difference through the deductible or figure out a way to pay less than the restoration costs.
When do you pay the deductible for homeowners insurance?
A home insurance deductible only comes into play when you file a claim. When you file a claim, the company deducts your deductible from the claim check.
For instance, if you have damages of $5,000 and you carry a $1,000 deductible, your insurer sends you a check for $4,000 to cover the damages.
What is the standard deductible for homeowners insurance?
Home insurance deductibles typically range from $250 to $2,000.
The average annual premium for $350,000 home insurance coverage is $1,769 for a $250 deductible. That average rate drops to $1,710 for a $500 deductible and $1,595 for a $1,000 deductible.
Forbes Advisor research found that homeowners save an average of 7% by increasing their home insurance deductible from $500 to $1,000 and 16% by increasing the deductible from $500 to $2,000.
Is $2,500 a good deductible for homeowners insurance?
If you can afford to pay $2,500 out-of-pocket if you file a homeowners insurance claim, a $2,500 deductible may be a good option. The key to any deductible amount is affordability.
Talk to your insurer to find out exactly how much you could save with a $2,500 deductible.
Can I waive my home insurance deductible?
Some insurance companies might offer a “waiver of deductible.” This is a special privilege in which the insurer waives your deductible after certain types of losses, such as if your home is totally destroyed in a fire.
If your insurer offers this option, it will be spelled out in the policy. Ask your insurance company if this option is available on your policy and precisely when it will—and won’t—go into effect.
