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The Average Recommended Homeowners Insurance Deductible

The Average Recommended Homeowners Insurance Deductible

The Average Recommended Homeowners Insurance Deductible

Your homeowners insurance policy will always have a set deductible for you to decide on. Smart and responsible homeowners know that choosing the right amount of deductible can save you the trouble when an emergency occurs and you need to file a claim. 

However, if you’re confused over the right amount of deductible for your policy, you can refer to this article to help you make a decision. Read and find out about the average recommended homeowners insurance deductible.

What is A Deductible?

The homeowners insurance deductible is defined as “an amount of money that you yourself are responsible for paying toward an insured loss.” The deductible can come in a set dollar amount. However, you can also set a percentage of the total amount of insurance as your deductible. 

This allows the homeowner to share the risk with the insurance company in order to help make sure of the homeowners due diligence on the property. In general, the deductible is applied per claim and it is applied to the property damage.

If you also wish to pay for a lower premium, you can opt for a larger deductible on your policy. However, this means that you will shoulder a big chunk of the cost when you suffer a loss. This is the primary reason why you should make a smart choice when it comes to your deductibles.

Recommended Deductible for Homeowners Insurance

As a rule of thumb, we recommend that your insurance deductible should be $500 to $1000, depending on where you are located. However, you can choose to increase your deductible based on the size of your home.

This may be the average homeowners insurance deductible, but you shouldn’t limit yourself to this choice. You can opt for a higher deductible that can help you reduce your monthly insurance premium. On the other hand, the most important thing to remember is that you should be comfortable with the amount stated in your homeowners insurance deductible.

Factors to consider when deciding on the deductible amount

Choosing the right amount of deductible for your homeowners insurance can be a bit tricky at first. However, you need to take certain factors into account in order to make the right choice. If you need to make a speedy decision, we recommend that you consider these two factors the most when making a decision.

1. Insurance Premium

As we have stated earlier, you will pay a lower premium if your deductible is high. If you wish to lower your monthly payments, it is best to opt for a higher deductible. As mentioned in a recent case study of a $200,000 home, a 1% increase in the deductible will decrease the premium by at least 5%.

2. Your Savings 

Your homeowners insurance deductible will be an out-of-pocket expense. While your lower premium may help you save up on your monthly payments, a higher deductible will have you reach deep into your savings account during an emergency. It is important that you are able to produce this amount when needed, therefore, consider how much money you have in your savings account before deciding on your homeowners insurance deductible.

When it comes to your deductible, it is important to find an amount that you are comfortable with in case of an emergency. Surely, a higher insurance deductible can lower your premium, but you don’t want to be overwhelmed when the time comes that a loss occurs. 

Before you decide on your insurance deductible, you need to make sure that you are ready to produce this money in case of an emergency. After all, you don’t want your deductible to become a burden in a time when you need it the most.

Check out our article to learn more about home insurance and deductibles: Is Home Insurance Tax-Deductible?

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