Homeowners insurance policies typically offer several types of deductibles for property damage coverage. Here are some common types of homeowners insurance deductibles:
Dollar Amount Deductible: This is the most common type of deductible found in homeowners insurance policies. With a dollar amount deductible, the policyholder is responsible for paying a specific amount out of pocket before the insurance coverage begins. For example, if a policy has a $1,000 deductible and the insured property sustains $5,000 in covered damage, the policyholder would pay the first $1,000, and the insurance company would cover the remaining $4,000.
Percentage-Based Deductible: Some homeowners insurance policies offer deductibles based on a percentage of the insured property’s dwelling coverage or the policy’s overall coverage limits. For instance, if a policy has a 1% deductible and the insured property is covered for $200,000, the deductible amount would be $2,000. Percentage-based deductibles can be advantageous for more expensive properties but may result in higher out-of-pocket costs for policyholders.
Split Deductible: In some cases, homeowners insurance policies may have separate deductibles for specific types of perils or events. For example, a policy might have one deductible for windstorm damage and another deductible for all other covered perils. Split deductibles can vary based on the insurance company and policy terms.
Wind/Hail Deductible: Particularly in areas prone to severe weather events like hurricanes or tornadoes, insurers may offer separate deductibles specifically for wind or hail damage. These deductibles are often higher than standard deductibles and are applied only to claims related to windstorm or hail damage.
Named Storm Deductible: In regions susceptible to hurricanes or tropical storms, homeowners insurance policies may include a named storm deductible, which applies when damage is caused by a named storm according to the National Hurricane Center or another designated authority. Named storm deductibles are typically higher than standard deductibles and the benefits only apply when specific conditions are met.
It’s essential for homeowners to carefully review their insurance policies to understand the deductible provisions and how they affect coverage and out-of-pocket costs in the event of a claim. Additionally, homeowners should consider factors such as their property’s location, risk exposure and budget when selecting a deductible amount that best suits their needs.