Savings by state for raising your homeowners insurance deductible
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Raising your home insurance deductible: Savings by state

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How much can you save by hiking your home insurance deductible? An Insurance.com rate analysis shows homeowners can trim an average of $260 off their rate by jumping to a $2,500 deductible from $500. Homeowners in Florida, who pay the most for home insurance nationwide, save the most in the country ($675). Those in Idaho, the third-cheapest state for home insurance, save the least ($96), according to Insurance.com’s analysis.

We’ll explain the pros and cons of choosing a high deductible as well as show how much you can save in every state by hiking your deductible on a variety of different policies.

Deductibles on home insurance: How does it work?

Homeowner insurance deductibles are the amount you pay when you file a claim before the insurance company kicks in their portion. Deductible amounts generally fall into two categories. The ones you choose and the ones that are calculated as a percentage based on other components of your policy. Percentage-based deductibles are usually – but not always – applied to wind and hail damage. For example, if you have a 1 percent deductible for wind and hail damage and dwelling coverage of $200,000 and filed a hail damage claim, you would pay $2,000.

But for the dwelling coverage portion of your policy, which covers damage to your home, and the personal property insurance component, which covers possession in your home, you choose a deductible amount. Those amounts vary by insurance company, but typically range from $500 to $2,500. When you file a claim for damage to your property and the contents of your home, you’ll pay out the deductible amount you chose before your insurer pays its portion.

If you choose a high deductible amount, you can reduce the amount you pay for coverage. That’s because insurance companies realize you’ll file fewer claims if you have a high deductible. After all, if your house sustains $3,000 worth of damage, you’re not likely to file a claim if your deductible is $2,500. If your deductible is $500, there’s a greater chance you’ll file a claim to get the balance paid by your insurer.

The downside of having a high deductible is that you may wind up paying out of pocket for damage to your home, and you may not have the money on hand. So you do need to be sure you can absorb the expense of a high deductible should you need to file a claim. Still, there’s a case to be made for choosing a high deductible to save money. Deductibles are paid only when you file a claim, and the average homeowner makes a claim only once every 10 years, says insurance agent David Shaffer, who has researched  insurance company underwriters’ studies.

Home insurance claims and deductibles

Shaffer, an independent agent in Walnut Creek, California who helped establish the insurance consumer advocacy group United Policyholders, recommends selecting the highest deductible you can afford. The reason is that most home insurance companies will increase your rates after you file a claim. If you file more than one or two claims in a 10-year period, your premiums are likely to jump, and if you file two in a three-year period they will increase significantly. In some cases, if you file more than one claim under your policy's term, the insurance company will not renew your policy.

So it makes financial sense to pay for minor damage yourself and not turn to your coverage. An insurance payout for minor damage, say $5,000 or less, isn’t going to make up for the increased amount you pay for your policy after filing a claim.

“My message is that consumers need to proactively prevent small losses from happening since they are going to cover them if they do occur, pocket the savings over all of the years they will own a home, and truly view one's home insurance policy as a consumer product to cover major losses,” Shaffer says.

Some insurance companies only allow deductibles up to $1,000. In those cases he recommends shopping for a home insurance policy from a company that allows much higher deductibles.

How much you save in every state for hiking your home insurance deductible

Enter your state in the search field, or scroll the chart horizontally to the right, and you’ll see in the chart below how much you can save by raising your deductible from $500 to $2,500. In addition, you’ll see the rates for deductibles of $500, $1,000, $1,500, $2,000 and $2,500 for a policy with the following limits:

  • $200,000 in dwelling coverage
  • $100,000 in liability

StateRate with $500 deductibleRate with $1,000 deductibleRate with $1,500 deductibleRate with $2,000 deductibleRate with $2,500 deductibleSavings from $500 to $2,500 deductible
Florida$3,838$3,575$3,515$3,246$3,164$675
Kansas$2,142$1,939$1,802$1,653$1,557$585
Oklahoma$2,851$2,651$2,583$2,479$2,331$519
Louisiana$3,158$2,979$2,911$2,732$2,643$515
Arkansas$2,226$2,063$1,905$1,906$1,775$451
Colorado$1,552$1,417$1,260$1,073$1,137$415
South Dakota$1,579$1,379$1,282$1,204$1,168$411
Rhode Island$1,397$1,205$1,172$1,047$1,007$390
North Carolina$904$773$712$555$555$349
Minnesota$1,451$1,333$1,205$1,156$1,108$344
Missouri$1,852$1,722$1,730$1,598$1,538$313
Indiana$1,314$1,198$1,118$967$1,003$312
Alabama$2,521$2,314$2,232$2,208$2,213$307
Texas$2,037$1,945$1,894$1,828$1,734$303
Iowa$1,325$1,205$1,101$1,056$1,025$300
Illinois$1,204$1,053$1,000$912$906$298
Tennessee$1,620$1,521$1,446$1,328$1,323$297
New Mexico$1,282$1,197$1,072$1,063$988$293
South Carolina$1,517$1,402$1,314$1,255$1,227$290
Nebraska$1,727$1,583$1,610$1,513$1,441$285
Mississippi$2,390$2,290$2,239$2,112$2,117$273
Kentucky$1,416$1,355$1,265$1,195$1,144$272
Massachusetts$1,330$1,190$1,161$1,083$1,062$268
West Virginia$1,377$1,288$1,206$1,138$1,116$262
New York$1,068$935$899$845$830$238
Michigan$1,156$1,073$1,005$952$919$237
Montana$1,244$1,175$1,107$1,039$1,012$231
Ohio$962$864$807$779$737$226
Arizona$884$813$738$691$660$224
California$896$793$763$681$675$221
Pennsylvania$891$801$743$697$671$220
Connecticut$996$902$840$795$788$208
Maryland$939$866$831$741$731$208
New Hampshire$790$680$647$589$593$197
Virginia$1,043$959$934$876$851$192
Nevada$774$703$639$615$586$187
Alaska$974$908$837$828$815$159
DC$765$706$663$621$611$154
Washington$701$653$612$572$554$147
Vermont$638$589$556$511$496$142
Wyoming$991$976$943$868$850$140
New Jersey$779$711$681$656$642$137
Utah$699$642$605$581$562$137
North Dakota$1,399$1,354$1,350$1,284$1,266$133
Wisconsin$829$788$759$707$698$132
Oregon$700$643$605$583$573$127
Georgia$1,225$1,103$1,040$966$1,105$120
Maine$777$721$701$665$658$118
Hawaii$399$337$321$279$288$111
Delaware$777$748$704$684$670$108
Idaho$661$622$601$578$565$96

Insurance.com's analysis found that all states realized similar savings to the chart above for a policy with $300,000 in liability coverage, rather than $100,000, the overall average savings was $261. Here are average savings for jumping to a $2,500 deductible from $500 for other various coverage levels:

  • $300,000 dwelling/$300,000 liability -- $321
  • $400,000 dwelling/$300,000 liability -- $376
  • $500,000 dwelling/$300,000 liability -- $419

For more details on how to choose the right deductible for your particular situation, read our guide to selecting home insurance deductibles. Additionally, you can compare rates by ZIP code for five different deductible amounts for 75 coverage levels by using Insurance.com’s average home insurance rate tool.

Methodology:

Insurance.com in 2016 commissioned Quadrant Information Systems to field home insurance rates from up to six major insurers in each state for nearly all ZIP codes in the country for 75 coverage levels based on various dwelling and deductible limits. The homeowner profile is a 35-year-old married applicant with excellent insurance score; new business HO3 policy for house built in 2000 with frame construction and composition roof. Other Structures: 10%. Loss of Use defaulted: 10%. Guest Medical limit: $5,000. Personal property: 50% of dwelling coverage for actual cash value.

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