Home Insurance Deductible — How to Choose the Right Amount

Your deductible is the amount you pay out of pocket before insurance kicks in. It's one of the few variables you control directly, and it has a significant impact on your premium. A higher deductible means lower premiums — but more financial exposure if something goes wrong. The right choice depends on your emergency fund, how often you'd realistically file a claim, and your comfort level with risk.

See how different deductible levels change your premium estimate with the Homeowners Insurance Calculator.

How Deductible Affects Premium

Deductible	Avg Annual Premium	Savings vs $500	Out-of-Pocket Risk
$500	$2,300	—	Low per-claim cost
$1,000	$2,050	$250/yr (11%)	Moderate
$1,500	$1,900	$400/yr (17%)	Moderate
$2,500	$1,750	$550/yr (24%)	Higher
$5,000	$1,550	$750/yr (33%)	Significant
Percentage (2% of dwelling)	Varies	20–35%	Varies by home value

These savings are approximate and vary by insurer and location. But the pattern is consistent: doubling your deductible from $1,000 to $2,000 typically saves 12–18% on your premium.

The Break-Even Calculation

Here's the math for choosing between a $1,000 and $2,500 deductible:

Premium savings: ~$300/year with the higher deductible
Extra out-of-pocket per claim: $1,500 ($2,500 - $1,000)
Break-even: If you go 5+ years without a claim, the $2,500 deductible saves you $1,500 in premiums — exactly covering the higher per-claim cost
Average claim frequency: Homeowners file roughly once every 8–10 years

Since the average gap between claims is 8–10 years, a higher deductible usually wins the math. In those 8 years, you'd save $2,400 in premiums and pay $1,500 more on the one claim — a net savings of $900.

Percentage Deductibles in Disaster-Prone States

In hurricane, wind, and hail zones, you may encounter percentage deductibles instead of flat dollar amounts:

Deductible Type	How It Works	Example ($400K home)
1% of dwelling	Deductible = 1% of Coverage A	$4,000
2% of dwelling	Deductible = 2% of Coverage A	$8,000
5% of dwelling	Hurricane/wind specific	$20,000

In Florida, for example, hurricane deductibles of 2–5% are common. On a $400,000 home, that's $8,000–$20,000 out of pocket before insurance pays anything for hurricane damage. These percentage deductibles apply only to the specified peril (hurricane, wind, hail) — your standard deductible applies to all other claims.

How to Choose Your Deductible

Choose $500–$1,000 if:

You have less than $3,000 in emergency savings
Your home is in a high-risk area where claims are more likely
You prefer predictable costs over savings

Choose $1,500–$2,500 if:

You have $5,000+ in emergency savings
You haven't filed a claim in 5+ years
You want to maximize premium savings
You'd rather self-insure small incidents

Choose $5,000+ if:

You have substantial savings ($10,000+)
Your home is low-risk (mild climate, new construction)
You only want insurance for catastrophic events
You're comfortable handling $5,000 repairs yourself

A common strategy: set your deductible at the highest amount you could comfortably pay within 30 days without going into debt.

For more ways to lower your premium, see How to Lower Homeowners Insurance Premiums. For understanding exactly what your policy covers, read What Does Homeowners Insurance Cover?. And for comparing costs by location, check Average Home Insurance Cost by State 2026.