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.
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