Your deductible is the amount you pay toward a covered claim before insurance pays the rest. Choosing it is a balance between your premium today and your costs if something happens.
The basic trade-off
- Higher deductible: generally a lower premium, but more out of pocket when you file a claim.
- Lower deductible: generally a higher premium, but less out of pocket when you file a claim.
A simple example
Say a covered fire causes $10,000 in damage. With a $1,000 deductible, you pay $1,000 and insurance pays $9,000. With a $2,500 deductible, you pay $2,500 and insurance pays $7,500. The higher deductible may lower your premium every year, but costs you more when there's a claim.
Want to compare deductible options side by side? We'll quote a few for you.
Call (888) 928-9324Questions to ask yourself
- How much could I pay out of pocket tomorrow without hardship?
- Does my mortgage lender limit how high my deductible can be?
- How often have I filed claims in the past?
Watch for special deductibles
Some policies, especially in coastal areas, use a separate deductible for wind or hail. It may be a percentage of your coverage amount instead of a flat dollar amount. Read your declarations page or ask your agent so there are no surprises.
Read more: FAIR Plan glossary: insurance terms in plain English.