Understand Homeowners Insurance Deductibles

Understanding homeowners insurance deductibles

A homeowner's insurance deductible is the amount of money that you're expected to pay before your insurance company will pay you for an insured loss. The consequent claim payment that you receive from your insurance company is the entire damage or loss amount minus your deductible. That means that if your deductible is $1,000 and your home sustains $50,000 in insured damage, your insurance company will pay you $49,000 after paying your deductible.

The amount you give in homeowners insurance premiums your annual or monthly insurance payment — is directly correlated with how low or high you set your deductible, therefore, when you set your deductible you're weighing a few things: How much you can afford to pay in insurance payments against how much you can afford to pay out of pocket if something terrible happens. A high deductible gives you a lower insurance premium, but it could also prove to be too big of a hit to your bank account when it comes time to file a claim.

What Does a Homeowners Insurance Deductible Mean?

A deductible is an amount that you pay out of pocket for an insurance claim before your homeowners' insurance company will payout for the remainder of the loss.

You pay your deductible on a per-claim basis, meaning if your home is damaged in two different storms that were a month apart, you'd have to pay two separate deductibles. The only exception to this is in Florida, where, if your home is damaged in a hurricane, you pay a hurricane deductible per season rather than for each storm. That deductible would then apply to any subsequent hurricane damage until the end of the season, which runs June through November.

If a single claim involves two or more property coverage components, you only need to pay one deductible. That means if a house fire damages your home's structure, garage, and personal property, you may report your home's structural damage at the outset and personal property loss at a later date. Still, you'd only need to pay that out-of-pocket deductible once.

Types of Homeowners Insurance Deductibles

There are two typical homeowners deductibles

One type of insurance deductible insures your home for wind, hail, or hurricane related claims.

There are two types of deductibles you'll see on your homeowner insurance policy on the declaration page: one is a standard dollar amount (for most perils), and one is a specified percentage of your home's insured value (for wind/hail or hurricane-related claims). In both cases, it's the amount taken off the top of a claim payment; after you pay your deductible, the insurance company pays out the remainder of the claim.

Standard Deductible

This is the standard, fixed-dollar amount deductible that you pay out of pocket when you file a covered loss claim. A standard homeowner's insurance policy deductible is usually in the range of $500 to $2,000, although lower and higher deductible home insurance plans are also standard.

Dollar amount deductibles work like this: if your deductible is $1,000 and you file a roof claim totaling $6,500 in damages, you pay the first $1,000 of the repair costs out of pocket before your insurance company sends you a check for the remaining $5,500.

Percentage Deductibles

Percentage deductibles are specific to windstorms, named storm, and hurricane-related claims. They are calculated based on the percentage (usually 1% to 10%) of your home's insured value, or your total dwelling coverage amount. Meaning, if your house is insured for $200,000 and your policy has a 1% hurricane deductible, $2,000 would be deducted from the claim payment. If the damage amounted to $15,000, your reimbursement would be $13,000 after paying your deductible.