What Should My Home Insurance Deductible Be? 

One of the many parts of a home insurance policy to consider is your deductible. A home insurance deductible is how much you will have to pay out of pocket before receiving compensation for a home insurance claim. The amount of your deductible can vary depending on your insurer and your policy. While you may be able to set your deductible, you should do so carefully while knowing how your deductible will work when filing a claim. 

How a Home Insurance Deductible Works 

As an example, say you set your home insurance deductible at $500. A bad storm causes $1,000 in damage to your home. Since your deductible is set at $500, you will have to pay $500 toward repairs before receiving compensation from your insurer for the remaining expenses. 

You cannot change the deductible amount for an open claim, so it is important to set it at a reasonable amount from the beginning. 

High Deductible vs. Low Deductible 

Your deductible limit should be based on how much you can afford out of pocket after an incident. It should be a reasonable amount, although there are some benefits to having a high deductible. 

A high deductible can help you when damages near their limits. For example, say your deductible is set at $1,000 as opposed to $500. This means you can stretch compensation from the insurer further by covering more of the damages out of pocket. Higher deductibles can also result in lower monthly premiums.

Before setting your home insurance deductible, make sure to speak with your insurance agent and spouse to make sure you set a realistic deductible for your income and policy. 

Is a Home Insurance Deductible Required? 

While home insurance isn’t required by state or federal law, if you have a home insurance policy, you will also have a deductible. You will set your deductible at the time of purchasing your home insurance claim, although you can change it while the policy is active as long as you do not have an open claim. If you have an open claim and change your deductible, the change will not affect the current claim. For example, if your deductible is $1,000 and you attempt to lower it to $500 while you have an open claim, the current claim’s deductible will still be $1,000. The change from a $1,000 to $500 deductible will go into effect after the open claim is settled.