What Is a Deductible in Homeowners Insurance?

Home insurance deductibles typically range from $500 to $2,000.

Danny Smith
Written byDanny Smith
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Danny Smith
  • Licensed auto and home insurance agent

  • 4+ years in content creation and marketing

As Insurify’s home and pet insurance editor, Danny also specializes in auto insurance. His goal is to help consumers navigate the complex world of insurance buying.

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Katie Powers
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Katie PowersSenior Editor
  • Licensed auto and home insurance agent

  • 3+ years experience in insurance and personal finance editing

  • NPN: 20564519

Katie uses her knowledge and expertise as a licensed property and casualty agent in Massachusetts to help readers understand the complexities of insurance shopping.

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Updated | Reading time: 4 minutes

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A homeowners insurance deductible is the amount you pay out of pocket before your home insurance coverage takes effect after a claim. It’s important to understand your deductible amount, as it’ll affect your insurance premiums and how much you pay after a claim.

Setting a higher deductible will lower your premiums, but you’ll spend more out of pocket after a claim. Having a lower deductible results in higher premiums, but you’ll pay less out of pocket after a claim. The best option for you depends on your needs and financial situation.

Here’s what you need to know about deductibles to help you better understand your homeowners insurance policy.

How home insurance deductibles work

Your home insurance deductible is a set amount of money that you agree upon with your insurer that you’ll pay out of pocket if you file a claim. Your insurance coverage will only kick in once you’ve paid your deductible amount.

For example, if you have a $1,000 deductible and sustain $5,000 in damages, you’ll pay $1,000 and your insurer will pay the remaining $4,000.

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How to select a home insurance deductible

The average home insurance deductible ranges from $500 to $2,000, but in some cases, you have the option to set your deductible as high as $5,000 or even more. In other cases, you can set your deductible as a percentage of your home’s insured value, though this is less common.[1]

When choosing a deductible, try to find a balance between an affordable monthly premium and a deductible you can pay out of pocket without jeopardizing your budget. Consider your home’s value, what coverage you need, your budget, and what level of risk you’re comfortable with before choosing a deductible amount.

A lower deductible will mean higher monthly home insurance premiums, while a higher deductible will result in lower monthly premiums. If you’re willing to take a slight risk and opt for a higher deductible, you could save money on premiums each month. But if you want to avoid a large out-of-pocket payment, you’ll have to pay slightly higher premiums.

Deductible vs. premium

A premium is the amount you pay your insurer for your insurance coverage. You typically have to pay your premiums monthly, but you can also sometimes pay on an annual basis as well. Your chosen deductible has a direct effect on your premium amount, as it changes how much your insurer is on the hook for in the event of a claim.

Premiums and deductibles are inversely related: A high deductible reduces your premium, and a lower deductible increases your premium. With a lower deductible, your insurer will pay more of the claim, so it offsets the costs by charging you higher premiums. With a higher deductible, your insurer won’t pay as much for the claim, so it lowers your premiums.

Average homeowners insurance cost by deductible

Your homeowners insurance premium depends on the deductible you choose. The tables below show average annual premiums by deductible amount.

The below rates are estimated rates current as of: Thursday, September 4 at 12:00 PM PDT
State
sort ascsort desc
Average Annual Premium
sort ascsort desc
Hawaii$227
Vermont$933
New Hampshire$1,051
Washington D.C.$1,082
Delaware$1,234
Nevada$1,265
Pennsylvania$1,311
New Jersey$1,328
New York$1,342
Oregon$1,446
Virginia$1,446
Maine$1,572
Washington$1,588
Wisconsin$1,714
Connecticut$1,725
Ohio$1,789
West Virginia$1,793
Utah$1,811
Idaho$1,859
New Mexico$1,906
California$2,020
Michigan$2,057
Maryland$2,129
Massachusetts$2,132
Arizona$2,183
North Dakota$2,386
Montana$2,392
Minnesota$2,416
Florida$2,449
Indiana$2,460
Iowa$2,480
Wyoming$2,630
Illinois$2,666
South Carolina$2,723
United States$2,772
South Dakota$3,069
Colorado$3,148
Georgia$3,203
Alabama$3,222
Tennessee$3,252
Missouri$3,333
Mississippi$3,399
Kentucky$3,415
Arkansas$3,471
North Carolina$3,852
Texas$4,055
Kansas$4,141
Nebraska$4,858
Oklahoma$4,952
Louisiana$5,622
The below rates are estimated rates current as of: Thursday, September 4 at 12:00 PM PDT
State
sort ascsort desc
Average Annual Premium
sort ascsort desc
Hawaii$206
Vermont$848
New Hampshire$956
Washington D.C.$984
Delaware$1,122
Nevada$1,150
Pennsylvania$1,192
New Jersey$1,207
New York$1,220
Virginia$1,314
Oregon$1,315
Maine$1,429
Washington$1,444
Wisconsin$1,558
Connecticut$1,568
Ohio$1,627
West Virginia$1,630
Utah$1,646
Idaho$1,690
New Mexico$1,733
California$1,837
Michigan$1,870
Maryland$1,936
Massachusetts$1,939
Arizona$1,985
North Dakota$2,169
Montana$2,175
Minnesota$2,197
Florida$2,226
Indiana$2,236
Iowa$2,255
Wyoming$2,391
Illinois$2,424
South Carolina$2,476
United States$2,520
South Dakota$2,790
Colorado$2,862
Georgia$2,912
Alabama$2,929
Tennessee$2,956
Missouri$3,030
Mississippi$3,090
Kentucky$3,105
Arkansas$3,156
North Carolina$3,502
Texas$3,686
Kansas$3,764
Nebraska$4,416
Oklahoma$4,502
Louisiana$5,111
The below rates are estimated rates current as of: Thursday, September 4 at 12:00 PM PDT
State
sort ascsort desc
Average Annual Premium
sort ascsort desc
Wyoming$222
Maine$872
Vermont$945
Montana$1,088
New Jersey$1,138
Washington D.C.$1,166
Washington$1,229
Pennsylvania$1,242
South Dakota$1,247
Oregon$1,339
Wisconsin$1,339
Nevada$1,353
West Virginia$1,360
Delaware$1,376
Massachusetts$1,393
New York$1,416
New Hampshire$1,444
Maryland$1,549
Virginia$1,567
Utah$1,592
Idaho$1,618
Louisiana$1,721
Hawaii$1,771
Ohio$1,840
Indiana$1,894
Arizona$1,969
Illinois$2,124
Connecticut$2,135
Minnesota$2,195
Georgia$2,286
Michigan$2,350
South Carolina$2,441
Arkansas$2,488
California$2,506
Iowa$2,552
United States$2,556
Colorado$2,655
Mississippi$2,789
Missouri$2,818
Nebraska$2,869
North Carolina$2,876
Tennessee$2,880
Alabama$3,233
New Mexico$3,303
Kentucky$3,334
North Dakota$3,382
Kansas$3,603
Texas$4,305
Oklahoma$4,813
Florida$5,702
The below rates are estimated rates current as of: Thursday, September 4 at 12:00 PM PDT
State
sort ascsort desc
Average Annual Premium
sort ascsort desc
Hawaii$175
Vermont$721
New Hampshire$812
Washington D.C.$836
Delaware$954
Nevada$977
Pennsylvania$1,013
New Jersey$1,026
New York$1,037
Virginia$1,117
Oregon$1,118
Maine$1,214
Washington$1,227
Wisconsin$1,324
Connecticut$1,333
Ohio$1,383
West Virginia$1,385
Utah$1,399
Idaho$1,436
New Mexico$1,473
California$1,561
Michigan$1,589
Maryland$1,646
Massachusetts$1,648
Arizona$1,687
North Dakota$1,843
Montana$1,849
Minnesota$1,867
Florida$1,892
Indiana$1,901
Iowa$1,917
Wyoming$2,032
Illinois$2,060
South Carolina$2,104
United States$2,142
South Dakota$2,371
Colorado$2,433
Georgia$2,475
Alabama$2,489
Tennessee$2,513
Missouri$2,575
Mississippi$2,626
Kentucky$2,639
Arkansas$2,682
North Carolina$2,977
Texas$3,133
Kansas$3,200
Nebraska$3,754
Oklahoma$3,827
Louisiana$4,345
The below rates are estimated rates current as of: Thursday, September 4 at 12:00 PM PDT
State
sort ascsort desc
Average Annual Premium
sort ascsort desc
Hawaii$165
Vermont$679
New Hampshire$764
Washington D.C.$787
Delaware$898
Nevada$920
Pennsylvania$953
New Jersey$966
New York$976
Oregon$1,052
Virginia$1,052
Maine$1,143
Washington$1,155
Wisconsin$1,246
Connecticut$1,255
Ohio$1,301
West Virginia$1,304
Utah$1,317
Idaho$1,352
New Mexico$1,386
California$1,469
Michigan$1,496
Maryland$1,549
Massachusetts$1,551
Arizona$1,588
North Dakota$1,735
Montana$1,740
Minnesota$1,757
Florida$1,781
Indiana$1,789
Iowa$1,804
Wyoming$1,913
Illinois$1,939
South Carolina$1,981
United States$2,016
South Dakota$2,232
Colorado$2,289
Georgia$2,329
Alabama$2,343
Tennessee$2,365
Missouri$2,424
Mississippi$2,472
Kentucky$2,484
Arkansas$2,525
North Carolina$2,802
Texas$2,949
Kansas$3,011
Nebraska$3,533
Oklahoma$3,602
Louisiana$4,089

Types of deductibles

Home insurance companies generally offer two types of deductibles: dollar-amount and percentage-based. Dollar-amount deductibles are the more common of the two. This kind of deductible is a specific dollar amount — typically between $500 and $2,000 — that you pay before your coverage kicks in. It applies to just about all home insurance claims your home insurance policy covers, such as fire or theft.

A percentage-based deductible has a set percentage of your home’s insured value. If you have a 2% deductible on a $300,000 home, your deductible amount would be $6,000. Percentage deductibles are more common in areas prone to severe weather and storms, where risks are higher and damage is more costly. If you’re unsure whether this type of deductible is right for you, talk to an insurance agent.

Learn More: How to File a Home Insurance Claim

Learn More: How to File a Home Insurance Claim

What is a disaster deductible?

While homeowners insurance covers many perils, your regular deductible won’t apply for certain damages. For these cases, insurers offer special deductibles that pertain to specific natural disasters that can do extreme property damage, including the following:

  • illustration card https://a.storyblok.com/f/162273/150x150/bc1c474c28/weather-96x96-yellow_045-thunder.svg

    Hurricane

    Hurricane deductibles are typically percentage-based and range anywhere from 1% to 5% of your home’s insured value. These are common in hurricane-prone coastal states and any areas that see severe hurricane damage.

  • illustration card https://a.storyblok.com/f/162273/x/68ed522f01/windstorm-and-hail.svg

    Wind and hail

    A wind and hail deductible can be dollar-amount or percentage-based. Windstorm and hail deductibles are more common in tornado-prone areas and coastal areas that see a lot of severe storms and hail damage.

  • illustration card https://a.storyblok.com/f/162273/150x150/0194b78427/weather-96x96-orange_043-flood.svg

    Flood

    Flood deductibles are typically dollar-amount deductibles. They often accompany flood insurance policies required in some states at high risk for flooding. You can procure flood insurance through private insurers and the National Flood Insurance Program (NFIP).

  • illustration card https://a.storyblok.com/f/162273/x/a0c151e1ba/accidental-tearing-apart-cracking-etc.svg

    Earthquake

    Earthquake deductibles accompany earthquake insurance policies and are typically percentage-based deductibles. They’re most common in earthquake-prone areas like California.[2]

When do you pay your deductible?

You pay your deductible after your insurer approves your submitted claim. Paying your deductible doesn’t typically require you to write a check. Your insurance company simply subtracts your deductible amount from its claim payout.

For instance, if you have $5,000 worth of damage and your deductible is $500, your insurer will send you $4,500. Exactly when you receive your claim payment can vary, but your insurer will typically pay it by the start of repair work.

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Homeowners insurance deductible FAQs

The following information can help answer your remaining questions about how homeowners insurance deductibles work.

  • What is the normal deductible for homeowners insurance?

    The standard deductible for home insurance ranges from $500 to $2,000. A $1,000 deductible is one of the most common deductible options.

  • Is a $2,500 deductible good for home insurance?

    A $2,500 deductible can be good for home insurance if you want to have lower monthly premiums. But you need to make sure you can afford to pay $2,500 out of pocket in the event of a claim before setting a deductible this high.

  • Is a $1,000 deductible good for homeowners insurance?

    Yes. A $1,000 deductible is a good, balanced option for your homeowners policy. It’s a reasonably manageable amount to pay out of pocket in the event of a claim, and it’ll yield you moderate monthly premiums.

  • Is it better to have a $500 deductible or $1,000?

    It depends on your risk level and financial situation. A $500 deductible will result in lower out-of-pocket expenses after a claim, but you’ll pay higher monthly premiums. A $1,000 deductible will lower your homeowners insurance premiums, but you’ll pay more out of pocket after a covered loss. Consider your finances and the likelihood of filing a claim when choosing your deductible amount.

  • Should you file a claim even if your costs don’t exceed your deductible?

    No. If your repair costs don’t exceed your deductible, you shouldn’t file a claim, as your insurance coverage won’t kick in. Filing a claim can actually be harmful, as your insurer may raise your rates due to a perceived increase in risk.[3]

Methodology

Insurify data scientists analyzed rates from more than 180 home insurance companies sourced directly from Insurify’s partner companies and Quadrant Information Services. Rates span all 50 states and Washington, D.C., and quote averages represent the mean price for a given coverage level and geographic area. To ensure data reliability, only insurers meeting minimum quote thresholds were included in the analysis.

Unless otherwise specified, quoted rates reflect the average cost for homeowners with no prior claims and good credit with a home construction year of 1980. The default coverage assumptions include:

Default Coverage Assumptions

  • Dwelling coverage: $300,000
  • Deductible: $1,000
  • Personal property limit: $25,000
  • Liability limit: $300,000

Additional data points beyond these default values are sourced from Insurify’s proprietary database. Rates are updated monthly.

Sources

  1. Liberty Mutual Insurance. "Home Insurance Deductibles: Frequently asked questions (FAQs)."
  2. Insurance Information Institute. "Understanding your insurance deductibles."
  3. Insurance Information Institute. "How to file a homeowners claim."
Danny Smith
Danny Smith

Danny is a Brooklyn-based writer with a producer’s license for property and casualty insurance. A former editor at Insurify, he specializes in auto, home, and pet insurance. He works to translate his insurance expertise into digestible, easy-to-understand content for drivers, homeowners, and pet owners alike.

Danny has been a contributor at Insurify since March 2022.

Katie Powers
Edited byKatie PowersSenior Editor
Photo of an Insurify author
Katie PowersSenior Editor
  • Licensed auto and home insurance agent

  • 3+ years experience in insurance and personal finance editing

  • NPN: 20564519

Katie uses her knowledge and expertise as a licensed property and casualty agent in Massachusetts to help readers understand the complexities of insurance shopping.

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