What Is the Average Deductible for Homeowners Insurance?


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ByMark Fitzpatrick
Edited byRae Osborn
ByMark Fitzpatrick
Edited byRae Osborn

Updated: May 22, 2024

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The average deductible for home insurance lies between $500 and $2,000. Generally, the higher the deductible, the lower your home insurance premiums and vice versa. A policy's deductible is typically set at the time of purchase, but you can change it at any time during the term.

Key Takeaways

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A home insurance deductible averages $500 to $2,000, but it can also be a percentage of your policy's total insurance amount.

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The higher the deductible, the lower your premiums and vice versa.

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Choosing a deductible should be based on your financial situation, along with your history of claims and the value of your insured items.

What Is the Average Deductible for Home Insurance?

Home insurance deductibles are typically set at $500, $1,000, $1,500 or $2,000. While deductibles can be a specific dollar amount, they can also be a percentage of the total amount of insurance on the policy. This should be established with your provider at the time of purchase, but you may be able to change it at any point while your insurance is active.

When you need to make a claim, your deductible is how much you need to pay out of pocket before your insurance kicks in. For instance, imagine your home gets damaged due to a covered peril, like a storm, and the repair costs total $5,000. If your deductible is $1,000, you would need to pay $1,000 of the repair costs, and your provider would cover the remaining $4,000.

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A higher deductible often leads to lower insurance premiums, while a lower deductible leads to higher premiums.

Why Do Home Insurance Providers Require a Deductible?

Deductibles are a crucial component of many insurance policies, functioning as a form of cost-sharing between the insurance company and the policyholder. This arrangement allows for a more balanced distribution of financial responsibility when a claim is made. There are three general reasons why this system is widely adopted in the insurance industry:

  • Risk Sharing: It ensures that the policyholder shares some of the risk. This can discourage small claims and help keep insurance premiums more affordable.
  • Prevents Minor Claims: Having a deductible discourages policyholders from making claims for small losses, which can be costly for insurance companies to process.
  • Incentivizes Care: It incentivizes homeowners to maintain and protect their property. If homeowners know they'll have to pay a deductible, they might be more careful to prevent losses.

What Deductible Should You Choose?

Choosing the right deductible for your insurance policy depends on your needs, as it should be a balance between your immediate out-of-pocket costs and long-term insurance premiums and reflect your financial stability and risk tolerance.

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    Financial Situation

    Assess your current financial stability. Opt for a higher deductible if you have enough savings to cover higher out-of-pocket costs in the event of a claim. Conversely, a lower deductible might be more suitable if you have limited savings.

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    Claim Frequency

    Reflect on how often you may need to file a claim. A lower deductible might be more practical despite higher premiums if you live in an area prone to events like natural disasters since there's a higher likelihood of filing a claim.

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    Value of Insured Item

    Evaluate the value of the property or item you're insuring. If the value is high, you might opt for a lower deductible to ensure greater coverage.

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    Long-term Financial Impact

    Think about the long-term implications of your choice. A higher deductible can mean significant savings on premiums over time, but it requires you to be prepared for sudden large expenses.

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    History of Claims

    If you have a history of few or no insurance claims, consider a higher deductible, banking on the likelihood of not needing to make a claim.

The Average Cost of Home Insurance by Deductible

A home insurance policy with $100,000 in dwelling coverage and a $500 deductible costs an average of $1,635 per year, while the same policy with a $1,500 deductible costs $1,441 per year. Generally, a higher deductible leads to lower monthly premiums and vice versa.

Look at the table below and explore the varying rates by coverage and deductible.

Data filtered by:Results filtered by:
Coverage:
Coverage:$250K Dwelling / $125K Personal Property / $200K Liability
$500Annual Premium$2,821
$1000Annual Premium$2,614
$1500Annual Premium$2,479
$2000Annual Premium$2,334

FAQ

Figuring out the average deductible for home insurance is essential to ensure you choose a deductible that aligns with industry norms and is realistic for your financial situation. Get deeper insight into the average home insurance deductible through our answers to some of the most frequently asked questions.

Is a $500 or $1000 deductible better?
What is the deductible for insurance?

About Mark Fitzpatrick


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Mark Fitzpatrick has analyzed the property and casualty insurance market for over five years, conducting original research and creating personalized content for every kind of buyer. Currently, he leads P&C insurance content production at MoneyGeek. Fitzpatrick has been quoted in several insurance-related publications, including CNBC, NBC News and Mashable.

Fitzpatrick earned a master’s degree in economics and international relations from Johns Hopkins University and a bachelor’s degree from Boston College. He is passionate about using his knowledge of economics and insurance to bring transparency around financial topics and help others feel confident in their money moves.