4 Best Strategies To Find the Right Homeowners Insurance Deductible

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Homeowners insurance can be costly, but it provides crucial financial protection that you don’t want to skip. Finding the right deductible can help you fit this coverage into your budget.

A deductible, which can range from $100 to $5,000, is the amount you pay before the insurer starts paying on your claim. Selecting the right one keeps your share of the costs affordable and can even lower your tax bill.

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Here are four strategies to help you pick a homeowners insurance deductible amount.

1. Assess the Likelihood That You’ll Make a Claim

You’ll only need to pay your homeowners insurance deductible if something happens that results in a claim. Thinking about liability and property damage risks in your location can guide you in picking a deductible amount you’d be comfortable handling.

For instance, if you live somewhere prone to vandalism, dangerous weather or wildfires, your could be at heightened risk of filing a claim. In that case, you might want a lower deductible than someone less likely to have claims.

You can also consider your claims history and any special deductibles for incidents such as hurricanes and earthquakes.

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2. Look at Your Emergency Savings

Your deductible is an unexpected, out-of-pocket expense, so having to pay it qualifies as an emergency. Consider the amount you have in your emergency fund and how much of it you could afford to pay if you have to file an insurance claim.

For example, if you have $1,000 saved, you don’t want to pick a deductible that exceeds $1,000 — and you might want a lower deductible to avoid wiping out your savings. But having thousands in savings could make a higher deductible affordable.

3. Explore the Effect on Your Premiums

Your deductible amount directly affects your homeowners insurance rates since it impacts how much the insurance company must pay toward a claim. A higher deductible should lower your homeowners insurance rate, and a lower deductible likely will increase your rate.

Consider requesting quotes from homeowners insurance companies and exploring their rates based on different deductible options. At the same time, check for discounts that could make even a low-deductible policy more affordable.

4. Consider Your Long-Term Financial Picture

Even if your income and savings justify a higher homeowners insurance deductible, consider potential changes to your financial stability. For example, if you have a major expense coming up or are in danger of losing your job, you might want to reduce your deductible to ensure that you’ll be able to pay your share of repairs in the event you have to file a claim.

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