How home insurance deductibles work

A deductible is the amount you owe on a covered loss before your insurer starts paying its share. Every declarations page lists it. Many policies carry a second one that applies only when a hurricane or another named storm does the damage. Once you know both numbers, you know what a claim will cost you before storm season starts.

The flat dollar deductible

The simplest form is a dollar amount. On a $1,000 claim with a $300 deductible, the insurer pays $700. On a bigger loss the deductible stays the same, so it takes the largest share of a modest claim.

A policy can carry more than one, with a different deductible for each type of coverage. Read all the way down the declarations page, not just to the first deductible you see.

The percentage deductible

Some deductibles are written as a percentage rather than a dollar amount. The percentage is not taken from the size of the claim. A named storm deductible, for example, is usually a percentage of the home's insured value.

That's why a percentage looks small on paper and large after a storm. A 5% named storm deductible on a $300,000 house leaves the policyholder paying $15,000 out of pocket.

The named storm deductible

A named storm deductible is separate from the normal deductible in a homeowners policy, and the insurer applies it only when a named storm causes the damage. A hurricane deductible usually applies to damage from a storm the National Weather Service has named. The percentages range from 1% to 10% of the value of the insured home, and some policies use a fixed dollar amount instead.

The timing rules differ from policy to policy. Your policy says whether the deductible applies per event, per season or per calendar year. Under a per-event deductible, two storms in one season can mean paying it twice.

Deductibles and the premium

The deductible and the premium move in opposite directions, so a higher deductible means a lower premium. Plan for the amount you'd owe after a storm the same way you'd plan for any other large bill.

An annotated example

What to do next

Find the declarations page in your insurer's app or the renewal packet. Write down each deductible it lists, and for any percentage, multiply it by the dwelling limit to get the dollar figure. Check whether the named storm deductible applies per event or per season. If the page doesn't answer it, ask your insurer or agent which deductible applies to which kind of loss.