What is a good deductible for home insurance?

Is it better to have a high or low deductible for home insurance? That depends.

If you choose a high deductible amount, you can reduce the amount you pay for coverage. In other words, you can reduce your annual premium.

The downside of having a high deductible is that if you file a claim, you will have to pay that high deductible out of pocket. Before you choose a deductible, it is important to ensure you will have that amount of cash on hand should you need to file a claim. If you can't afford the deductible, you'll have a problem if you 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. Put some money aside over those years in case you need to pay the deductible in the future.

Why does having a higher deductible lower your insurance premiums?

When you choose a higher deductible, you take on more of the financial responsibility in a claim.

Insurance companies also know you'll file fewer claims if you have a high deductible. 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.

How much can you save by increasing your homeowners insurance deductible?

An Insurance.com rate analysis shows homeowners can trim an average of $512 off their rate by jumping to a $2,500 deductible from $500. 

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 $5,000. In addition, you'll see the rates for deductibles of $500, $2,000, $2,500, $3,000, $4,000 and $5,000 for a policy with the following limits:

  • $200,000 in dwelling coverage
  • $100,000 in liability
State $500 $2,000 $2,500 $3,000 $4,000 $5,000
Alaska$ 1,686$ 1,425$ 1,395$ 1,332$ 1,244$ 1,221
Alabama$ 3,034$ 2,549$ 2,541$ 2,460$ 2,173$ 2,149
Arkansas$ 4,327$ 3,712$ 3,653$ 3,610$ 3,242$ 3,227
Arizona$ 2,385$ 1,876$ 1,843$ 1,787$ 1,573$ 1,565
California$ 1,377$ 1,128$ 1,107$ 1,079$ 988$ 960
Colorado$ 4,073$ 3,573$ 3,548$ 3,472$ 2,828$ 2,809
Connecticut$ 2,499$ 2,086$ 2,062$ 2,005$ 1,819$ 1,816
Washington D.C.$ 1,268$ 1,062$ 1,055$ 1,019$ 936$ 924
Delaware$ 1,357$ 1,075$ 1,070$ 1,054$ 1,002$ 989
Florida$ 3,107$ 2,551$ 2,542$ 2,542$ 2,389$ 2,383
Georgia$ 2,500$ 2,161$ 2,142$ 2,078$ 1,807$ 1,799
Hawaii$ 651$ 578$ 570$ 567$ 541$ 539
Iowa$ 2,603$ 2,109$ 2,089$ 2,044$ 1,858$ 1,839
Idaho$ 2,056$ 1,583$ 1,569$ 1,497$ 1,318$ 1,318
Illinois$ 3,133$ 2,560$ 2,517$ 2,488$ 2,172$ 2,155
Indiana$ 3,035$ 2,572$ 2,503$ 2,459$ 2,196$ 2,181
Kansas$ 6,088$ 4,938$ 4,878$ 4,802$ 4,431$ 4,350
Kentucky$ 2,908$ 2,606$ 2,552$ 2,530$ 2,239$ 2,228
Louisiana$ 4,026$ 3,232$ 3,220$ 3,181$ 3,099$ 3,068
Massachusetts$ 2,089$ 1,750$ 1,721$ 1,689$ 1,543$ 1,541
Maryland$ 2,074$ 2,047$ 2,000$ 1,964$ 1,767$ 1,767
Maine$ 1,543$ 1,246$ 1,211$ 1,221$ 1,130$ 1,129
Michigan$ 3,561$ 2,884$ 2,834$ 2,806$ 2,475$ 2,461
Minnesota$ 2,791$ 2,201$ 2,161$ 2,125$ 1,920$ 1,905
Missouri$ 3,753$ 2,775$ 2,734$ 2,683$ 2,819$ 2,798
Mississippi$ 4,280$ 3,942$ 3,875$ 3,934$ 3,432$ 3,402
Montana$ 3,877$ 3,215$ 3,124$ 3,088$ 2,720$ 2,713
North Carolina$ 2,863$ 2,248$ 2,073$ 2,024$ 1,890$ 1,752
North Dakota$ 3,148$ 2,707$ 2,681$ 2,631$ 2,466$ 2,448
Nebraska$ 6,259$ 5,368$ 5,266$ 5,231$ 4,807$ 4,746
New Hampshire$ 1,277$ 1,052$ 1,044$ 1,004$ 920$ 920
New Jersey$ 1,475$ 1,169$ 1,155$ 1,140$ 1,043$ 1,034
New Mexico$ 2,571$ 2,116$ 2,116$ 2,110$ 2,032$ 2,001
Nevada$ 1,583$ 1,271$ 1,256$ 1,224$ 1,113$ 1,081
New York$ 2,556$ 2,114$ 2,108$ 2,078$ 1,928$ 1,904
Ohio$ 2,308$ 1,893$ 1,843$ 1,802$ 1,616$ 1,597
Oklahoma$ 5,711$ 4,548$ 4,483$ 4,376$ 3,874$ 3,839
Oregon$ 1,560$ 1,256$ 1,249$ 1,183$ 1,085$ 1,082
Pennsylvania$ 2,390$ 1,965$ 1,921$ 1,876$ 1,660$ 1,621
Rhode Island$ 1,695$ 1,418$ 1,402$ 1,390$ 1,213$ 1,205
South Carolina$ 2,775$ 2,314$ 2,250$ 2,239$ 2,028$ 1,961
South Dakota$ 3,666$ 3,337$ 3,311$ 3,247$ 3,040$ 3,000
Tennessee$ 3,215$ 2,607$ 2,528$ 2,462$ 2,218$ 2,183
Texas$ 5,095$ 4,436$ 4,351$ 4,488$ 3,933$ 3,861
Utah$ 1,625$ 1,302$ 1,272$ 1,221$ 1,132$ 1,118
Virginia$ 2,240$ 1,869$ 1,822$ 1,808$ 1,666$ 1,657
Vermont$ 1,240$ 1,042$ 1,017$ 1,008$ 922$ 912
Washington$ 1,816$ 1,391$ 1,381$ 1,275$ 1,129$ 1,122
Wisconsin$ 1,561$ 1,323$ 1,307$ 1,275$ 1,156$ 1,148
West Virginia$ 1,748$ 1,511$ 1,484$ 1,437$ 1,313$ 1,304
Wyoming$ 1,928$ 1,587$ 1,577$ 1,518$ 1,374$ 1,355

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 10 coverage levels by using Insurance.com's average home insurance rate tool.

Homeowners 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 does a home insurance deductible work?

Homeowner insurance deductibles are the amount you pay when you file a claim before the insurance company kicks in their portion.

Types of home insurance deductibles

Deductible amounts generally fall into three categories and are specified on the declarations page of your policy.

One is a fixed dollar amount, which is the most common. You select an amount, typically from $500 to $2,500. So, for instance, if your deductible is $1,000, and you file a claim for $5,000, you would pay $1,000 and your insurance company would pay $4,000.

The second deductible type is based on a percentage of the policy's total coverage amount. 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 file a hail damage claim, you will pay $2,000.

The third is a hybrid of the first two and is called a split deductible. If your policy has a split deductible, the fixed dollar amount deductible applies to most perils, but others, like hurricane and earthquake, will have a percentage-based deductible.

Methodology

Insurance.com commissioned Quadrant Information Services to field 2022 home insurance rates from up to 147 companies in all states, including Washington D.C, for nearly all ZIP codes in the country for 6 coverage levels based on various dwelling and deductible limits.

Home insurance FAQs

What are deductibles for natural disasters?

Some types of natural disasters have a separate deductible. Flood and earthquake insurance are separate policies with their own deductibles. In 19 states, insurance companies can add a separate deductible for hurricanes and windstorms, and in some cases there may also be a separate hail deductible. Read your policy for details.

What is the average deductible for homeowners insurance?

Most companies will provide quotes with either $500 or $1,000 deductibles. While lower deductibles were once common, most people choose one of those two.

When do you pay your homeowners insurance deductible?

The home insurance deductible is payable by you only if you file a homeowners insurance claim that gets approved. You will pay the deductible amount toward the repairs and then the insurance company will pay out the rest. If your deductible is $1,000 and you file a $10,000 claim that gets approved, you will pay the $1,000 deductible first and then your insurance company will pay $9,000.

What types of claims does the home insurance deductible apply to?

The homeowners insurance deductible is only applicable to the property coverage portions of your home insurance policy. In addition to property coverages, standard home insurance policies include personal liability coverage and medical payment coverage. However, you will not pay a deductible in liability or medical payment claims.