Insurance Deductibles 101

An insurance deductible is the amount of money that you are required to pay out-of-pocket before your home or auto insurance policy will begin to cover the cost of a claim. For example, if you have a $500 deductible and you file a claim for $1,000 in damages, your insurer will pay $500 of the claim and you will be responsible for paying the remaining $500.

The amount of your deductible can have a significant impact on the overall cost of your home insurance policy. Higher deductibles typically result in lower premiums, because they shift some of the financial responsibility for a claim from the insurer to the policyholder. However, this also means that you will have to pay a larger amount out-of-pocket if you need to file a claim.

When choosing a deductible for your home insurance policy, it's important to carefully consider your financial situation and your ability to pay a large out-of-pocket expense in the event of a claim. In general, it's a good idea to choose a deductible that you can comfortably afford to pay in the event of a loss, while still keeping your premiums as low as possible. You should also review your policy periodically to ensure that your deductible is still appropriate for your needs.