What Are Home & Renters Insurance Deductibles? (2024)

FAQs

What is the deductible in a renters or homeowners insurance policy? ›

Your homeowners or renters insurance deductible is what you pay out of your own pocket for a loss or repair that's covered by your policy. Suppose you have a $1,000 deductible for home insurance or renters insurance and the cost of covered damages comes to $3,000.

Home insurance deductible options will vary among insurance companies. However, most home insurance policy deductibles tend to be from $100 to $5,000. The average home insurance deductible is $1,000.

Simply put, a deductible is the amount of money that the insured person must pay before their insurance policy starts paying for covered expenses.

The most common deductible our drivers choose is $500, but there's no wrong choice. Ultimately, it comes down to what you prefer: Higher deductible = Lower car insurance rate and higher out-of-pocket costs. Lower deductible = Higher car insurance rate and lower out-of-pocket costs.

A health insurance deductible is the amount you pay before your insurance kicks in. For example, if you have a $1000 deductible, and you need a $1000 MRI procedure and a $2000 surgery, you will pay $1000 out-of-pocket for the MRI, and then $0 for the surgery.

An AOP deductilbe is the amount of money that you're responsible for covering in certain insurance claims. “AOP” stands for all other perils and applies to claims involving events like fire and theft.

A homeowners insurance deductible is the amount you're responsible for paying out of pocket before your insurance company will pay on a claim. You typically have the option to set your deductible between $500 and $2,500 — sometimes even higher.

There are two types of deductibles you'll find in homeowners policies: dollar amount and percentage. The first type of deductible is more common. This specifies a dollar amount that you would pay out of pocket, like $1,000. The second type is a percentage of the total amount of insurance on your policy.

Simply put, 80/20 coinsurance means your insurance company pays 80% of the total bill, and you pay the other 20%. Remember, this applies after you've paid your deductible.

A low deductible of $500 means your insurance company is covering you for $4,500. A higher deductible of $1,000 means your company would then be covering you for only $4,000. Since a lower deductible equates to more coverage, you'll have to pay more in your monthly premiums to balance out this increased coverage.

What happens if I don't meet my deductible? ›

What happens if you don't meet your deductible? If you do not meet the deductible in your plan, your insurance will not pay for your medical expenses—specifically those that are subject to the deductible—until this deductible is reached.

Prescriptions typically count toward the deductible as long as they are covered under your plan. Your copay for a prescription may count toward the deductible, depending on your plan. Your health insurance agent can help you determine what type of deductible you have and which prescriptions your plan might cover.

There aren't any hard statistics on this, but industry sources say a $500 deductible is considered “standard.” There are good reasons to opt for a higher deductible, though…

A high-deductible plan is any plan that has a deductible of $1,600 or more PDF opens in new tab for individual coverage and $3,200 or more for family coverage in 2024. Compared to a traditional health insurance plan, a high-deductible health plan comes with a higher deductible and lower premium.

If you are generally healthy and don't have pre-existing conditions, a plan with a higher deductible might be a better choice for you. Your monthly premium is lower since you're only visiting the doctor for annual checkups, and you're not in need of frequent health care services.

Homeowners Liability Coverage

Unlike the other types of coverage in your policy, liability insurance doesn't have a deductible that you must pay for out-of-pocket before your insurance company begins paying losses.

If you have a $250 deductible, you'll pay $250 to the repair shop and your insurance will pay $750. The biggest part of an auto policy is car liability insurance. Liability pays others when you're responsible for damage or injuries.

If your deductible is $100 and you cause $350 of vehicle damage by backing into a tree, you would only have to pay your $100 deductible, while your insurance would pay the other $250. However, you could spend more on your premium by having a lower deductible and never end up filing a claim.