What Is a Homeowner’s Insurance Deductible?

What is a homeowner’s insurance deductible?

Your homeowner’s insurance deductible is the amount you agreed to pay before you can file a claim with your insurance provider, and because it affects your homeowner’s insurance and your coverage.  Choosing the right deductible is important when it comes to choosing an insurance policy with the most value.

All right, so understanding a homeowner’s insurance deductible, you probably already know this, but you must pay your homeowner’s insurance deductible before you can file a claim on any stolen or damaged property that your insurance policy will cover.  Every home insurance policy does have a deductible. You do have some power in choosing that deductible amount.

Homeowner insurance companies present their deductibles differently. For instance, you might be able to choose from deductibles of $1,000 or $2,500 your premium be lower if you choose a higher deductible and vice versa.

So who pays the deductible?

The homeowner is responsible for paying the deductible. However, you won’t actually send your insurance company a check after you file a claim, the insurer subtracts the deductible from the settlement.

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

Now what is the standard deductible on homeowner’s insurance?

There’s no standard for deductibles on homeowner’s insurance. However, most insurance companies give you the option to choose from $1,000 and up.

Many companies offer lower deductibles, such as $500 and even $250.  Companies rarely offer no deductible policies, but when they do, those policies do come with a higher premium.

It’s generally a good idea to choose a deductible around $2,500.  While this does mean, if you were to file the claim, you would have to pay the $2,500 but having that $2,500 policy does reduce your insurance premium.

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

However, it’s not a good idea to raise your deductible as high as it’ll go when choosing a homeowner’s insurance deductible, keep in mind that amount precludes you from making filing any claim that is below that amount.

For example, if you have a $10,000 deductible, you may have a pretty cheap premium, but you’ll only be able to make a claim on damage in excess of $10,000.

In this case, if your $1,500 laptop were to be stolen, your high deductible would dwarf this loss, and you would end up having to pay for that laptop fully out of pocket.

In this case, $1,000 deductible would at least help you recover $500 of that laptop.

All right, that’s all I have for you today. If you have any questions about your current homeowner’s policy, feel free to reach out to me. I’ll answer any questions you have.