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In addition to understanding how different types of coverage provide your home with the protection it needs, you should also understand how deductibles work. By doing so, you can better prepare for the unexpected.

What Is a Deductible for Homeowners Insurance?

A deductible is an amount you must pay out-of-pocket before your insurance company will pay the claim. If you file a claim, you must pay a deductible. When you build your policy, you choose the deductible amount.

We have outlined some key points about home insurance deductibles so if the time ever comes to file a claim, you will know what to expect.

Types of Homeowners Insurance Deductibles

There are a number of types of homeowners insurance deductibles, but the two most common are:

Flat Deductibles

A flat deductible is a fixed dollar amount that you will pay out of pocket if you have a covered loss. Technically, your insurance company subtracts the deductible from the amount claimed, and that's the amount you'll be responsible for.

For example, if your deductible is $1,000 and you file a claim after a hailstorm damages your siding and it's determined that the cost to fix it is $9,000, your insurance company will pay out $8,000 and you will cover the remaining $1,000.

Percentage Deductibles

If you choose a percentage deductible, your deductible would be a percentage of the total coverage amount on your policy. If your home is insured for $300,000 and your deductible is 2 percent, you would pay $6,000 ($300,000 multiplied by 2 percent).

How to Choose Your Homeowners Deductible

Having a lower deductible means you will pay less out of pocket should you need to file a claim. However, you'll pay more in premiums over a longer period of time. With a higher deductible, you'll pay more if you have a covered claim, but your premiums will be lower each month.

You should compare what you can afford in the short and long term when choosing your deductible amount. Consider your household income and other out-of-pocket expenses you may incur during the year. Determining your deductible is dependent on what you personally can afford in the short or long term.

Higher deductibles reduce the guaranteed amount people pay for their premiums, whereas the deductible is only paid if they file a claim. Consider setting aside money specifically to cover your deductible in case of a claim if you choose a higher deductible. In this way, you won't empty your savings account because you were planning to use it for other emergencies.

What Is the Standard Deductible for Homeowners Insurance?

Homeowners commonly choose a $1,000 deductible (for flat deductibles), with $500 and $2,000 also being common amounts. Those are the most common deductible amounts, but you can choose higher deductibles to save even more money. In other words, it's what you can reasonably afford to pay, given you file a claim and have to pay out of pocket.

Home insurance deductibles apply to every claim you make, no matter how many you make. As an example, if you have a $1,000 deductible and you claim a tree branch that goes through your roof during a storm, which needs to be fixed for $3,000, you will still have to pay $1,000 out of pocket, with your insurance company covering the remaining $2,000.

When Do You Pay Your Homeowners Insurance Deductible?

If your home insurance claim is accepted, you'll receive a settlement amount less your deductible. You would not file a claim, however, if your settlement amount is less than your deductible. Regardless of whether you believe the damage to your home will cost less than your deductible to fix, you should still speak with your insurance agent.

There are a few kinds of claims that are generally exempt from deductibles or have a lower deductible applied to them, such as scheduled personal property coverage claims or the Fire Department Service charge, but your standard homeowners’ insurance deductible usually applies to most claims.

How Does Your Deductible Affect Your Homeowners Insurance Premiums?

The amount of your insurance premium is directly influenced by your deductible. By setting a high deductible, you can lower your premium, which means you have fewer out-of-pocket expenses. There is, however, the possibility of paying an unpredicted, higher amount. The lower the deductible, the higher your premiums. If you file a claim, however, you'll pay less out of pocket before the insurance company covers the claim.

Multiple claims within a short period of time can affect your home insurance premium or even cause your policy to not be renewed, so consider what you can pay on your own before filing a claim.

Fortunately, no matter how you set your deductible, you can still save money on your homeowners' insurance! Learn how to save with our home insurance discounts, from smart home features to going paperless. Are you interested in learning more about your home insurance deductible? We'll guide you through your home insurance and help you determine the best deductible for you. Get in touch with us today and we’ll help you understand how insurance claims work.

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Lead Claims Consultant, IICRC Certified

APD Roofing


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APD Roofing

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