How Does a Home Insurance Deductible Work?

Like other insurance policies, your home insurance policy comes with a deductible. This is an amount of money that you will pay out of pocket when filing a claim before you can receive compensation.

For example, say a bad storm with rain and hail sweeps in, busting out two of your windows and damaging your roof, which causes a leak. Overall, the damage is quoted at $2,000 for repair by your local expert. Your deductible is $1,000. This means that you will cover all expenses up to $1,000 in regard to the damage to your home. After you’ve spent your deductible of $1,000, your home insurance provider will step in to cover the rest.

How Much is a Home Insurance Deductible?

Most home insurance policies offer deductibles anywhere between $500 and $2,000, although this varies depending on your plan. This is a fixed amount that you agree upon when signing your home insurance policy. You may be able to haggle about your deductible, either raising or lowering it. A lower deductible generally means higher premiums while a higher deductible can mean lower premiums. A high deductible means paying more out of pocket if you have to file a claim, however.

Do You Always Have to Pay a Home Insurance Deductible?

If you file a claim, you will have to pay your deductible before receiving compensation. However, you do not always have to file a claim on your home insurance policy after an incident. It is always recommended to have the damage of your home appraised by an expert. If the cost of repairing your home is less than your deductible, you can often save money by not filing a home insurance claim.

Keep in mind that your deductible is not the same as the limits on your home insurance policy’s coverage. Although home insurance will cover what your deductible does not, the policy itself also has limits on how much it will and will not cover. Homeowners are generally encouraged to purchase their home’s total replacement cost value in home insurance in order to cover the cost of completely rebuilding after a disaster if necessary. General liability insurance under home insurance also has certain limits. Most home insurance policies offer $100,000 in liability insurance at minimum, although you can also choose higher limits of this.

Be sure to find the home insurance policy that fits your home in case of an accident or disaster.