Homeowner Insurance Deductibles: How Do They Work?

Table of Content

• What should you not say to an insurance adjuster?
• Frequently Asked Questions (FAQs)
• Find Insurance By State
• How Does an Insurance Deductible Work?

While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. Our insurance team is composed of agents, data analysts, and customers like you. They focus on the points consumers care about most — price, customer service, policy features and savings opportunities — so you can feel confident about which provider is right for you. Health insurance policies with lower monthly premiums tend to have higher deductibles.

Once you reach your out-of-pocket maximum, your insurance plan will pay all additional expenses at 100 percent. You’ll continue to pay premiums until you no longer have the insurance plan. A deductible, on the other hand, only has to be paid if you use the insurance. Your deductible automatically resets to $0 at the beginning of your policy period.

What should you not say to an insurance adjuster?

You’d file a claim with your insurance company, after which they’d factor in your deductible and then cut you a check for $2,000. You, the homeowner, are responsible for coordinating repairs and paying for these services directly. The good news is that many big insurance carriers have relationships with preferred vendors and contractors who can help coordinate repairs, which can make things a little easier. Your health insurance deductible is what you pay for covered services before your plan begins paying. This table illustrates how different deductibles homeowners insurance premiums in various locations.

Your deductible is part of your out-of-pocket costs and counts towards meeting your yearly limit. A dollar amount deductible is the most common in home insurance policies, stating that you must pay a certain amount (usually $500 to $2,500) per home insurance claim that was filed. These deductible amounts are also usually lower than their percentage-based counterparts. If you’re trying to pick the right insurance for you, visit with a local health insurance provider. Many companies offer one-on-one guidance counseling to help you understand your options, weigh your risks, and select a plan that’s right for you. High-deductible insurance plans work well for people who anticipate very few medical expenses.

Frequently Asked Questions (FAQs)

A low-deductible plan lets you better manage your out-of-pocket expenses. If you receive insurance through an employer, your premium is typically deducted directly from your paycheck. For example, your employer may pay 60 percent, and then the remaining 40 percent would be deducted from your paycheck. For this reason, it’s always wise to have enough cash on hand in your emergency fund to cover your deductible if you had to.

The content created by our editorial staff is objective, factual, and not influenced by our advertisers. Bankrate’s editorial team writes on behalf of YOU – the reader. Our goal is to give you the best advice to help you make smart personal finance decisions. We follow strict guidelines to ensure that our editorial content is not influenced by advertisers. Our editorial team receives no direct compensation from advertisers, and our content is thoroughly fact-checked to ensure accuracy.

Find Insurance By State

Umbrella policies also have deductibles, which can vary from policy to policy. With flood insurance, you can expect a minimum deductible of $1,000. To protect your property, you’ll need to get an umbrella policy that covers earth movements . And if you live in a high-risk flood area, you can also purchase flood insurance through the National Flood Insurance Program .

Make sure to read your policy carefully to know which is covered in your deductible. As with other types of insurance, increasing your travel insurance deductible will lower the overall cost of the policy. Long-term care insurance doesn’t have a deductible, it does have an “elimination period” that works like a deductible. The elimination period requires the policyholder to pay for care for a certain period of time, such as 90 days, before the policy begins to pay out. At this point, every family member is fully covered regardless of whether they've reached their individual deductibles.

Renters insurance deductible

Let's say your home has an insured value of $300,000 and a 5% deductible for hurricanes. If it sustains damage in a hurricane, you'd be responsible for up to $15,000 before your insurance company starts paying. Once you file a claim, your insurer will determine the covered amount, subtract your deductible and provide the difference.

Understandably, some people choose a policy with the lowest deductible. Deductibles are common with home insurance policies, as well as other types of policies. When considering life insurance, it's important to understand your options. Deciding how to make that trade-off is a function of math and your own comfort level with higher out-of-pocket costs if you choose a higher deductible. Yes, your property taxes are still deductible if you pay them through via an escrow account.

At that point, your insurance would pay a portion of the remaining cost, such as 80%, and you'd be responsible for the remainder (in this case, 20%). An essential part of an insurance contract, a deductible is the amount the policyholder agrees to pay out of pocket before the insurer shoulders the cost of coverage. Whether you’re buying home insurance, life insurance, or health insurance, always shop around and compare policies before signing up. If you choose a home insurance policy with a $2,000 deductible, and you don’t have this amount of cash in reserves, you’ll run into hardship when filing a claim. Deductibles for earthquake insurance can range from 5 percent to 25 percent of your dwelling coverage. Dwelling coverage is the part of your home insurance policy that protects the physical structure of your home.

If you have a good credit score and are willing to pay some interest, you can pay your deductible with a credit card or a loan. For people who have plenty of savings, raising a homeowners insurance deductible can help save hundreds of dollars per year. Screenings, immunizations, and other preventive services are covered without requiring you to pay your deductible.

How Does an Insurance Deductible Work?

However, homeowners insurance policies also set limits for each type of coverage. A homeowners insurance deductible is the out-of-pocket amount you’re responsible for paying before your insurance kicks in. Only in rare cases can you get your homeowners insurance deductible waived.