How Does a Homeowners Insurance Deductible Work?

A homeowners insurance deductible can be confusing, but it may play a big role in your coverage and costs. At GEC Insurance Services, we’re here to discuss what a deductible is, how it works and give you tips to determine the right amount for you.

What is a Deductible?

A homeowners insurance deductible is the amount of money you have to pay out of your own pocket when you file a claim. Your deductible amount may vary depending on your insurer and policy, but it may typically range from $100 up to $5,000.

There are two types of deductibles:

• Dollar amount, which is a specific amount you must shell out after your claim is approved.

• Percentage-based, which is based on a certain percentage of your property’s insured value.

Choosing a higher deductible can help lower your insurance premium. However, it also means you’ll pay more out of pocket if you file a claim. On the other hand, a lower deductible may offer peace of mind if you’re on a tighter budget, though it typically comes with higher premiums.

How Does a Homeowners Deductible Work?

With a deductible, you will have to pay a specific amount after a claim has been reviewed and approved. Your insurer will typically cover the rest of the damage.

For example, your house got damaged by a fire with a covered loss of $10,000. Your deductible is set at $1,000. Once your claim is approved, you will have to pay $1,000. Your insurer will then have to shoulder the remaining $9,000.

How Should You Choose a Deductible?

Here are a few tips that may help you in setting a deductible amount on your homeowners policy:

1. Review your current budget and emergency savings. Make sure you can afford to pay the deductible in a lump sum if needed.
2. Determine the amount that you are comfortable with. You may save more on your premium with a higher deductible, or you may opt for a lower amount if you’re on a budget.
3. Ask your insurer about available deductible options and how the claims process works. Familiarize yourself with your insurer’s deductible offerings and how they may handle your claim.

Contact GEC Insurance Services today to learn more or to get a personalized quote.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.