How home insurance deductible works

Homeowners Insurance Deductibles

The deductible is the amount of money you have to write a check for before the insurance company will pay for damage to your home.

For example, if you have a $1500 deductible and you file a claim for $10,000, the insurance company will pay $8500 for that claim.

Types of Deductibles

There are generally two types of deductibles:

Flat dollar amount – in this case your homeowners insurance deductible is a set dollar amount. For example $1,500, $2,500 or $5,000

Percentage based –  in this case your homeowners insurance deductible is calculated by the insurance value of your home.  If you insured your home for $300,000 and you have a 1% deductible then you have a $3,000 deductible.

(300,000 * .01) = 3,000

The challenge with percentage deductibles is that as your insurance value increases, so does your deductible.

The percentage deductibles are also harder to remember, because well, math.  Makes it harder to know what to expect at the time of the claim because not only do you have to remember what percentage deductible you have, you also have to remember what value your home was insured for.

Click here to learn how to choose a deductible for your homeowners insurance

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