Understanding Homeowners Insurance Deductibles: What You Need to Know

A homeowners insurance deductible is the amount you pay out-of-pocket before your insurance company covers the remaining costs of a claim. This amount is typically a fixed dollar amount, but can also be a percentage of your home’s insured value. Higher deductibles generally result in lower premiums, but you’ll need to pay more upfront in the event of a claim. Factors to consider when choosing a deductible include your risk tolerance, home location, and financial situation. It’s important to review your policy annually to ensure you have adequate coverage and can afford your deductible if needed. If you live in a disaster-prone area, a lower deductible may be advisable to protect yourself from potential financial hardship. However, if your risk is lower, a higher deductible can save you money on your premiums.