Should You Have a High Deductible?

To save on insurance premiums, many homeowners take out policies with very high deductibles. Is it right for you?

How You Save

Many homeowners take out policies to protect their homes and belongings from natural disasters and other catastrophic events.

Yes No

A higher deductible on your homeowners insurance policy means paying less in monthly premiums. But if you do file a claim, you pay more out-of-pocket before the company foots the bill.

If you only file a claim every few years you can see major savings. The amount not paid in monthly premiums can more than cover the high cost of the deductible.

The Trade-Off

If you choose a high-deductible homeowners policy, it is important that you use it carefully. Paying low premiums saves you money, but only if you file as few claims on your policy as possible. Homeowners shouldn’t file claims to cover minor damage and other mishaps. This is because the more claims you file with your insurance company, the more likely it is they’ll raise your premiums.

When you have a high-deductible homeowners insurance policy, you are responsible for more of the cost if something happens to your home. Fallen trees and minor wind damage are often covered by homeowners policies. But if you’re paying a high deductible, it's probably cheaper to pay for the repair than to file a claim.

Is Your Home At Big Risk?

Before you decide on a high-deductible policy, think about the risk of natural disaster in the area you live.

Some areas are prone to wildfires, tornados, and hurricanes. If you live in one of these areas, a high deductible may be a bad idea. Should a disaster do serious damage to your home, the cost of the deductible could end up being more than the savings you got from the low premiums.

Having a homeowners insurance policy with a high deductible can be a great way to save on premiums. Whether or not it makes sense for you depends on your location and your ability to cover home damages and expenses out of your own pocket. A professional agent can help you decide if this is a smart choice. You can find an agent by using our free quoting service. Just fill out our 2-minute form and you can get free quotes from agents in your area.