Like in auto insurance, the home insurance deductible is the amount that you are responsible for in a covered home insurance loss. The insurance company will pay the damages minus whatever deductible that you have chosen. The most common deductibles for homeowners insurance policies are $500 or $1,000, though higher ones are available. There is no right or wrong deductible amount. It is up to the individual. It can be very beneficial to go with a higher deductible if you are the type of customer who doesn’t plan on filing a home insurance claim unless the damages are significant. This savings compounded by the number of years that you go claim free can really add up.
It is important to keep in mind that you may have a separate deductible for wind and hail as well as a covered hurricane loss. Companies have increasingly added these separate deductibles to their policies as a way to keep premiums down. North Carolina and South Carolina, in addition to 16 other coastal states, have permitted companies to offer a separate hurricane deductible. In many cases you will see the wind and hail/hurricane deductible as a percentage of the insured value of the home, generally 1-5%. This means that if you are insuring your home for $200,000 and you have a 2% deductible for wind and hail then your deductible would be $4,000. ($200,000 x .02= $4,000).
Companies began offering these hurricane deductibles after Hurricane Andrew in 1992. Insurance companies lost so much money on this storm and have on many hurricanes since, that a higher deductible for these storms shifted some of the burden to the insured making it possible for companies to still offer coverage instead of deciding to offer no coverage at all in certain states. We want as many carriers as possible to offer coverage in North and South Carolina since it keeps premiums lower due to higher competition. It is very important to review your deductible so that you know what amount of a covered loss that you will be responsible for. It is a good idea to review your policy at each renewal to make sure that you are adequately covered and not when it is too late. Please call us if you have any questions regarding deductibles or any questions at all regarding home insurance policies.