How a deductible works
When you file a covered claim, you pay the deductible and your insurer pays the rest, up to your limits. If a storm causes $6,000 of covered damage and your deductible is $1,000, the insurer would pay $5,000.
Deductibles usually apply per claim. If you file two claims in a year, you may pay the deductible twice.
The basic trade-off
A higher deductible means you take on more of the risk, so your premium is lower. A lower deductible means you pay less on a claim but more each year.
Many homeowners only file a claim once in a long while, so a higher deductible can save money over time. But if a claim would strain your budget, a lower deductible may be the safer pick.
How to pick yours
- Start with the amount you could pay from savings without borrowing
- Ask for quotes at two or three deductible levels and compare the yearly savings
- Divide the extra deductible by the yearly savings to see how many claim-free years it takes to come out ahead
- Check whether your policy has a separate wind, hail or hurricane deductible
- Ask your lender whether it limits your deductible
A rough example
Moving from a $1,000 to a $2,500 deductible might save something like 10% to 20% on your premium, though results vary a lot by carrier and home. If you rarely file claims, those savings can outweigh the extra $1,500 you'd pay on a claim. Hypothetical example; your quotes will differ.
When a lower deductible makes sense
A lower deductible can be the better choice if your emergency savings are thin, you live where storms or freezes cause frequent damage, or you'd rather have a predictable cost than gamble on a quiet year. Think about how you'd feel writing the check the week after a storm, not just the yearly savings.
Percentage deductibles
Some policies set the wind, hail or hurricane deductible as a percentage of your dwelling coverage instead of a flat amount. On a home insured for $300,000, a 2% deductible would be $6,000.
These are common in areas with frequent storms. Read your declarations page so you know what you'd owe before storm season.
Get help comparing
CapCenter's in-house insurance agency has licensed agents who compare quotes from multiple carriers, so you can see how different deductibles change your premium. Anyone can get a quote. You don't need a CapCenter mortgage. Coverage depends on your policy, so review it or talk with your agent.
