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How Do Homeowners Insurance Deductibles Work?

Your homeowners insurance deductible is the amount of money you agree to pay before you can use insurance benefits to repair damage to your home or belongings.

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The deductible you choose affects the cost of your home insurance and the coverage you're able to use. A higher deductible will make your homeowners insurance more affordable but could make it difficult for you to afford repairs if you have to make a claim. On the other hand, a lower deductible can lead to expensive insurance rates.

How do home insurance deductibles work?

Almost every home insurance policy requires you to pay a deductible, but you are usually able to choose the deductible amount.

Insurance deductible definition

An insurance deductible is the amount of money you're responsible for paying out of pocket before your insurer begins to pay for repairs after a covered loss

There are generally two types of deductibles offered by homeowners insurance companies:

  1. Fixed deductible
  2. Percentage-based deductible

Insurers that offer a fixed deductible, also known as a flat deductible, give you the ability to choose a set dollar amount that you have to pay before they'll cover claim expenses. Typical home insurance deductibles range from $250 to $5,000. Your rates will be lower if you choose a higher deductible, and vice versa.

Alternatively, some companies set your deductible as a percentage of your policy's coverage levels. For example, let's say your home is insured for up to $300,000 and your deductible is 1% of the coverage limit. When filing a claim, you would pay $3,000.

Percentage-based deductibles are commonly offered for specific types of covered damage. For instance, in regions where wind or hail damage is common, insurers often require homeowners to pay a separate, percentage-based deductible for these perils instead of a flat amount.

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When should you choose a percentage-based deductible?

There are a couple of scenarios where choosing a percentage-based deductible could have advantages.

  • If you own an expensive home and can afford to pay for minor repairs out of pocket, a percentage-based deductible could help you save on your premiums.

    If you own a home insured for $1 million and choose a 1% deductible of $10,000, you'd take on a greater share of your policy's risk than if you had settled on a $2,500 flat-rate deductible. As a result, your premium would decrease.

  • If you want more flexibility with your deductible, you could also benefit from picking a percentage-based deductible. Let's say you own a $150,000 home and have a $1,000 deductible. You want to increase your deductible and lower your premiums, but you don't want to commit to a deductible of $2,500 — the next increment commonly offered by many companies.

    With a 1% deductible, the amount you'd have to pay would increase from $1,000 to $1,500 instead of $2,500, a much more manageable increase for the average homeowner.

Who pays the deductible?

As a homeowner, you are responsible for paying the deductible. However, you won't actually send a check to the insurance company. After you file a claim, your insurer subtracts the deductible from your settlement.

For example, if you file a $10,000 claim and you have a $500 deductible, then the settlement would come out to $9,500.

How to choose your deductible for homeowners insurance

When choosing your homeowners insurance deductible, find a balance that makes sense for your budget and for the amount of property you can safely pay to replace out of pocket.

Most home insurance companies offer deductibles of $1,000 and up, and many offer smaller deductibles of $500 and even $250. Companies rarely offer no-deductible policies, but when they do, the policies are more expensive.

It's generally a good idea to select a homeowners insurance deductible of at least $1,000.

While this means that you'd have to pay $1,000 to file a claim, having a higher homeowners insurance deductible reduces your rates — often by a significant amount.

However, you shouldn't raise your deductible as far as it will go. When choosing a homeowners insurance deductible, keep in mind that the amount you select prevents you from making a claim below that amount.

For example, if you have a $10,000 deductible, you might have a very cheap premium, but you'll only be able to make a claim on damage in excess of $10,000. In this case, if your leaky roof costs $3,000 to repair, your high deductible would require you to pay the entire bill.

However, a $1,000 deductible would result in your insurance company covering $2,000 of the repair work.

On the other hand, making claims raises your premiums, so it might be worthwhile to opt for a higher deductible (and a more affordable rate) as long as you can afford to foot the bill for less expensive losses.

If you have a $10,000 deductible and you can complete the $3,000 roof repair without help from your insurer, then cheaper coverage could be worth giving up the ability to make small claims.

How your homeowners insurance deductible affects your rate

The average price of homeowners insurance can vary by $40% depending on the deductible you select.

Raising your deductible from $500 to $1,000 will decrease the cost of your homeowners insurance by 6%, on average.

Bar graph showing the average costs of homeowners insurance with different deductibles

However, the amount you'll save by choosing a higher deductible varies from one insurer to the next. Both Nationwide and State Farm charge homeowners the same amount whether you choose a $500 or $1,000 deductible, making these companies a good choice for people who prefer a low deductible.

Average annual home insurance rate by deductible amount

American Family$1,760$1,659$1,492$1,307
Country Financial$2,292$2,104$1,815$1,581
State Farm$1,107$1,107$974$893

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On the other hand, homeowners with coverage from Chubb can save 12% by switching from a $500 deductible to a $1,000 deductible — that's the largest savings we found.

Flood insurance deductibles

Just like with regular homeowners insurance, your flood insurance provider requires you to pay a deductible on claims. If you purchase flood insurance from the National Flood Insurance Program (NFIP), you can receive premium discounts based on the size of your flood insurance deductible.

If you have coverage with a private flood insurance company, then you're often given the choice between a $2,000 or $5,000 deductible. As with regular homeowners insurance deductibles, the amount you choose affects your premium.

Frequently asked questions

What if the damage to my home is less than my deductible?

You can't make a claim for an amount that's less than your deductible. If you experience damage that costs less to repair or replace than the amount of your deductible, you'll have to pay for it out of pocket.

Who do I pay my home insurance deductible to?

When you make a home insurance claim, you don't have to pay your deductible. Your insurance company will simply deduct the amount from your final settlement. For example, if you have $5,000 worth of damage to your home and a $1,000 deductible, the insurance company will send you a check for $4,000.

What is a good deductible for home insurance?

We usually recommend a deductible of at least $1,000, which will help pay for major repairs but may not cover small claims. However, it's important to choose your deductible based on what you can afford to pay out of pocket if your home is damaged.

What is a flat deductible?

A flat deductible is a fixed amount that you're responsible for paying if you need to make a claim. In contrast, some companies offer a percentage-based deductible, which is calculated based on the amount of coverage you purchase.


To compare home insurance rates, we gathered quotes from ZIP codes across Illinois based on a home built in 1977 with $229,700 of dwelling coverage, $100,000 of personal liability coverage and $5,000 of guest medical coverage. We compared quotes with four different deductibles: $500, $1,000, $2,500 and $5,000.

ValuePenguin's analysis used insurance rate data from Quadrant Information Services. These rates were publicly sourced from insurer filings and should be used for comparative purposes only — your own quotes may be different.

Editorial Note: The content of this article is based on the author's opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.