How to Increase Your Deductible Without Risking Coverage
Raising your home insurance deductible is one of the quickest and most effective ways to reduce your monthly premium. But doing it the wrong way can leave you financially exposed in the event of a claim.
In this guide, we’ll explain how to increase your deductible safely, estimate how much you could save, and help you decide the right deductible amount based on your risk tolerance and financial situation.
What Is a Home Insurance Deductible?
Your deductible is the amount you agree to pay out-of-pocket before your insurer covers the rest of the claim.
For example, if you have a $1,000 deductible and file a $10,000 claim for storm damage, you’ll pay the first $1,000 and your insurer pays $9,000.
Why Raising Your Deductible Lowers Your Premium
Insurers reward homeowners who assume more risk by lowering their premiums. This is because:
- You’re less likely to file small claims.
- The insurer pays out less if you do make a claim.
Average Premium Savings by Deductible (2025 Estimate)
| Deductible | Avg. Annual Premium | % Savings vs. $500 Deductible |
|---|---|---|
| $500 | $1,620 | — |
| $1,000 | $1,380 | ~15% |
| $2,500 | $1,150 | ~29% |
| $5,000 | $970 | ~40% |
*Savings vary by insurer, state, and home value.
How to Raise Your Deductible Without Taking on Too Much Risk
1. Choose a Deductible You Can Actually Afford
Don’t select a $5,000 deductible just to save money if you’d struggle to cover that amount in a real emergency. A good rule of thumb:
Keep your deductible amount in a dedicated savings or emergency fund.
2. Consider Your Claim History
If you rarely file claims, you’re a better candidate for a higher deductible. Frequent filers may be better off with a lower deductible to avoid repeat out-of-pocket costs.
3. Check for Percentage-Based Deductibles
Some policies (especially in high-risk areas like hurricane zones) use percentage-based deductibles tied to your home’s insured value. That means:
- A 2% deductible on a $400,000 home = $8,000 out-of-pocket.
Always ask whether your deductible is flat or percentage-based.
4. Make Sure It Doesn’t Affect Special Coverages
Increasing your base deductible doesn’t always affect deductibles on certain endorsements like:
- Wind/hail damage
- Earthquake
- Sewer backup
These may have separate rules. Review your policy carefully.
When a High Deductible Makes Sense
- You have a large emergency fund.
- Your home is newer and less likely to need repairs.
- You rarely file claims.
- You want to reduce your monthly expenses.
When to Be Cautious
- You live in a disaster-prone area (frequent storms, wildfires, etc.).
- You have aging systems or appliances more likely to fail.
- You’re planning major home upgrades soon.
In these cases, a lower deductible might provide better peace of mind.
Final Tip: Review Annually
Reassess your deductible each year during policy renewal. As your finances improve or risks change, you can adjust accordingly for optimal savings and protection.
Next Up:
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