A homeowners insurance deductible means that you are responsible for covering the out-of-pocket amount before your insurer pays out on a claim. After you have paid your deductible, the claim amount that you receive from your insurance company will be the damage or loss amount less your deductible.
Your deductible is set at the time that you purchase your home insurance. However, you can modify it anytime during your policy term. Your deductible will directly affect how much or little you pay in homeowners premiums. A lower deductible means that you will pay less out-of-pocket for a claim but pay more in premiums. A higher deductible will lower your home insurance rates but could prove costly if you have to file a claim.
How Do I Pay My Homeowners Insurance Deductible?
Your deductible is deducted from the insured loss or damage amount and is paid per claim. This means that if you have two separate events that cause damage to your home, you will need to pay two separate amounts for each of those claims. The only exception is in Florida where you will pay a special hurricane deductible per season instead of each storm.
When Should I Pay My Homeowners Insurance Deductible?
Once your claim has been accepted by your insurance company, your deductible will be paid. Your deductible is not paid like your phone bills or utility bills. Instead, your insurer subtracts it from your claim amount.
Homeowners Insurance Deductible Types
There are two types of insurance deductibles to decide from when buying a home: percentage deductibles for homeowners insurance, specifically for damage caused by wind/hail, named thunderstorms, or hurricanes, and flat dollar amounts, specifically for property damage or losses. It’s the amount that is taken from the top of a claim. After your deductible has been paid, the insurance company will pay the rest of the claim.
Flat Dollar Deductibles
This is the standard, fixed-dollar amount of deductible you pay out-of-pocket when you file a claim to cover a loss. The typical homeowners insurance policy deductible ranges from $500 to $2,000. However, lower or higher deductible home insurance plans can also be common.
Percentage deductibles cover hurricane-related claims, such as wind/hail, named thunderstorms, and hurricane-related losses, as stated above. They are usually based on the dwelling insurance limit or your home’s insured property.
Deductibles may vary depending on the type of storm that caused damage to your home or personal property. Although wind, hail, and hurricane damage are protected by standard homeowners insurance, there may be a special percentage of deductible depending on your policy details and where you live.
Hurricane and Named Storm Deductibles
Special hurricane insurance can be applied to hurricane damage claims in hurricane-prone areas of the country such as Florida and other oceanside counties along the Atlantic coast. Although the criteria to trigger a hurricane or named storm deductible vary from one state to another, insurance companies are required to wait until a hurricane or storm has been officially named or declared by the National Weather Service.
Wind and Hail Deductibles
Hail and wind deductibles work in a similar way to hurricane deductibles. They are paid in percentages, not fixed dollar amounts. These deductibles are standard in Tornado Alley, consisting of the states Kansas, Oklahoma, Texas, and Nebraska, as well as certain Midwestern states such Ohio and Iowa.
How Do I Choose How Much My Homeowners Insurance Deductible Is?
You will need to consider whether you want lower homeowners insurance rates or higher out-of pocket costs in the event of a catastrophe. You will likely reduce your insurance costs by increasing your deductible. However, you will have to pay more for claims if your house is damaged or burglarized.
Reducing your out-of-pocket expenses is the main reason that many insurance owners choose a lower deductible policy. It’s up to the policyholder and their particular circumstances to decide what else. However, policyholders need to discuss their individual insurance needs and situation with their agent or company representative in order to understand their coverages and deductibles. They also need to know how these things will impact them in the event that they are lost.
It can be hard to make the decision to have a higher deductible with lower monthly insurance costs or a lower deductible with higher monthly insurance costs when you are finding the perfect home. However, if you talk to your insurance agent, you can figure out what will work best for you and your needs. Your insurance needs don’t have to be hard or expensive with a reputable insurance company by your side!