How Much Can You Save by Changing Your Deductible?

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According to ValuePenguin, homeowners insurance rates have increased steadily “by a cumulative 19.1%” between 2018 and 2023. While it seems like the rise in rates is slowing — last year, the overall average increase was 4.9% compared to 2.8% so far this year — there might be steps you can take to lower your costs.

One way to save on homeowners insurance (and auto insurance) is to increase your deductible. But just how much can you save and is increasing your deductible worth it? In this article, we’ll look at:

Types of Deductibles

If you file a homeowners insurance claim, your deductible is what you’re required to pay towards repairing or replacing any damaged or stolen property before your insurer steps in. It’s common for a homeowners insurance deductible to be between $500 – $2,500.

It’s also possible to have multiple deductibles on a single policy since some insurers allow for different deductibles on different types of coverages. For example, you might have one deductible for your dwelling coverage, another deductible for windstorm and hail coverage, and a third deductible for tropical cyclone coverage.

But — depending on your insurer — your deductible might not be as simple as a set dollar rate. There are two main types of homeowners insurance deductibles: fixed deductibles and percentage-based deductibles.

Fixed Deductibles

A fixed deductible — also known as a flat deductible — is a set dollar amount that you can choose based on increments allowed by your insurer. For example, an insurance company might allow its policyholders to choose a deductible between $1,000 and $10,000 in $1,000 increments.

Percentage-Based Deductibles

A percentage-based deductible is a deductible based on a percentage of your policy’s coverage limits. With companies offering percentage-based deductibles, it’s common to see options for a deductible of 1% or 2% of your coverage limit. If, for example, you have a $350,000 coverage limit on your home, then a 1% deductible would be $3,500. A 2% deductible would be $7,000 for a policy with the same coverage limit.

When it comes fixed deductibles vs. percentage-based deductibles, going with the option for percentage-based (when offered) will likely allow you to take on a higher deductible than if you chose a fixed rate. The benefit in doing so is this: The greater a risk you take on, the lower your premiums will be. Of course, the risk is that you’ll need to be ready to pay more out-of-pocket if the unexpected happens.

How Much You Can Save by Increasing Your Deductible

You might be wondering just how much you can save by increasing your homeowners insurance deductible. Unfortunately, there’s no single answer. Savings will vary depending on several factors, including:

  • Where you live
  • Who you’re insured with
  • What type of homeowners insurance policy you have (ex: home HO-3 vs. condo HO-8)
  • How much coverage your policy includes

But we did some digging here at Team Clark to get an idea of what savings look like as your deductible increases. We got quotes from several insurance companies for various coverage limits. Take a look at a few of the quotes we received below.


Note: For each example, the deductibles are listed in the increments offered by the insurance company.

#1: Homeowners Insurance (Based on $386,000 Total Dwelling)

Annual Premium
Change in Annual Premium
Base Rate
- $210 (- 13%)
- $373 (- 23%)
- $513 (- 32%)

#2: Homeowners Insurance (Based on $445,000 Total Dwelling)

Annual Premium
Change in Annual Premium
Base Rate
- $222 (- 9%)
- $458 (- 19%)
- $723 (- 30%)

#3: Homeowners Insurance (Based on $840,000 Total Dwelling)

Annual Premium
Change in Annual Premium
Base Rate
- $333 (- 10%)
- $633 (- 19%)
1% total dwelling
- $827 (- 25%)
2% total dwelling
- $1,028 (- 31%)

#4: Homeowners Insurance (Based on $1,000,000 Total Dwelling)

Annual Premium
Change in Annual Premium
Base Rate
- $366 (- 9%)
- $697 (- 19%)
1% total dwelling
- $979 (- 27%)
2% total dwelling
- $1,184 (- 33%)

Just looking at the quotes above, premiums decreased by 9% on average with each step up (or incremental increase). The range that premiums decreased as deductibles increased was between 6 – 13% with each step up.

This might not be the case for everyone though. You’ll need to contact your insurer to see just how much changing your deductible lowers your premium. But when you compare what you’ll save each year on premiums to how much you’d have to pay out-of-pocket in the event of a catastrophe, increasing your deductible might not be worth it.

Things To Consider Before Increasing Your Deductible

Before you call your insurer to increase your deductible, here are three important things to consider:

1. You might not have much choice in your deductible.

While your homeowners insurance company can give you quotes for different deductibles, money expert Clark Howard advises you to check your mortgage contract before increasing your deductible if your home isn’t paid off.

“With homeowners insurance, you have to start with your mortgage company and find out what point they consider you to be uninsured even when you have homeowners insurance.”

If you’re still paying on your home, any additional risk you take on is also a risk to your lender. To minimize their risk, mortgage companies often tell you the maximum deductible you can have. This amount varies from company to company and based on the specifics of your loan.

“When you find out what that number is, you then contact your homeowners insurer and they can quote you how much of a discount you get as you raise your deductible,” says Clark.

Consider this: Let’s say your insurer allows you to get a $10,000 deductible. You feel comfortable shelling this out if the unexpected happens and the savings look good, so you go for it. But you don’t realize your mortgage requires you to have a maximum deductible of $5,000. What happens then?

“If you violate the terms of the mortgage, they do what’s called force-placed insurance, which sits on top of what you already have,” Clark warns. “And the premiums they charge you are gigantic because the mortgage lender makes a big profit on pushing force-placed [insurance] on you.”

Unlike your homeowners insurance policy, a force-placed insurance policy only protects your lender. But, since this type of policy is only required when you fail to meet the insurance requirements of a loan, you have to pay for it.


“Even if you can get a quote for like a $25,000 deductible, that doesn’t matter if you still have a mortgage.”

2. You should look for the point where the benefit of increasing your deductible peaks.

Calling your homeowners insurance company is one way to find out how much your premium will decrease as you increase your deductible. Many companies also let policyholders see the effects of and make changes to their deductible via online portals. Or — if you’re shopping around — many companies let you compare deductibles while generating quotes.

When comparing quotes, look for the point when the benefit of a lower premium peaks and taking on a higher deductible is no longer worth it financially. A few ways to do this is by asking yourself questions, like:

  • How much will I save each year on homeowners insurance with this deductible?
  • Based on what I’m saving in premiums each year, how long would it take me to save the total amount of my deductible?

For example, consider the quotes from example #1 above. Your annual premium is $1,601 and your deductible is $1,000. If you increase your deductible to $10,000, you’ll save $513 on your annual premium. This means your premium has decreased by 32% each year. But, in the event that you need to file a claim, your out-of-pocket expenses will have increased by 1,000%. And if you put your annual savings ($513) into a bank account, it would take around 19 years to save $10,000. If that math makes you uncomfortable, consider a smaller increase in your deductible which could still mean significant savings, but without as much risk.

According to, “the average homeowner makes a claim only once every 10 years.” Take a look at these homeowners insurance claims statistics from the Insurance Information Institute:

  • 5.3% of insured homes had a claim in 2021
  • 97.7% of homeowners insurance claims were for property damage (including theft) in 2021
  • $14,935 was the average cost for property damage claims in 2021, but property damage costs ranged from an average of $4,464 for theft claims to $83,519 for fire and lightning claims

3. You should think of your deductible as a starting point for what you’ll pay out-of-pocket when filing a claim.

As you consider the maximum amount you’re comfortable paying out-of-pocket for a claim, it’s a good idea to think of your deductible as a starting point for your potential expenses. There’s a chance that your deductible is lower than what you’ll end up paying out-of-pocket. And the lower your deductible is, the lower the difference is likely to be between your deductible and what you’ll actually pay out-of-pocket.

Imagine that you have a $1,000 deductible and your home sustains $1,200 in damages. Your insurance will only cover $200 if you file a claim. But the cons of filing a homeowners insurance claim might not be worth that difference. So, in this case, your actual out-of-pocket expenses would be $1,200. With this same deductible, however, you’d likely find a $2,000 claim worth it since insurance will cover $1,000 (or half) of the repair costs.

Now consider this: You have a $10,000 deductible and your home sustains $11,500 in damages. Would you file a claim knowing that you’ll have to pay $10,000, or 87% of total repair? If your answer is no, then your actual expenses are $11,500, or $1,500 over your actual deductible.

The higher your deductible is, the more you’re likely to need to pay out-of-pocket to make filing a claim (and taking the hit on your insurance) worth it.

Other Ways To Save on Homeowners Insurance

You never want to have a deductible that you’re unable to afford in the event of an unexpected catastrophe. So while increasing the deductible on your homeowners insurance policy is a guaranteed way to save on your premium, it might not always be an option.

So, here are five other ways you can save money on your homeowners insurance:


1. Shop Around.

Shopping around is one of the best ways to make sure you’re getting a fair rate for homeowners insurance. To do this, start by putting together a list of reputable homeowners insurance companies. You’ll need at least three companies to consider. Quick tip: Be sure to add your car insurance company to your list if it’s different from the company insuring your home.

Then, get a quote from each company for the same amounts of coverage. If Company A’s quote is for $350,000 in total dwelling, then your quotes from Company B and Company C should also be for $350,000 total dwelling. This way you can accurately compare what each company will charge for what they’re offering.

Once you have quotes, take time to look at reviews when it comes to customer satisfaction for handling claims. The company with the lowest prices might not always be your best option.

“Sometimes you’re better off paying a little more to be with a quality insurer who will be there when the chips are down,” Clark advises.

When you’re ready to shop around, check out our guide to help calculate how much homeowners insurance you need.

2. Bundle Your Insurance Policies.

Most major insurance companies offer many lines, or types, of insurance. Common lines of insurance include:

  • Auto (ex: cars, motorcycle, boats)
  • Health (ex: Medicare supplement)
  • Home and Property (ex: home, condo, renters, umbrella)
  • Life (ex: term life, whole life)

If you have more than one line of insurance, you should consider bundling your policies. Bundling simply means you buy more than one type of insurance from a single company.

If — for example — your car and home insurance are with two different companies, you’re likely missing out on savings. Forbes found that when bundling auto and home insurance, “the average discount is 14%, which is savings of around $466 a year.” To find the best savings, call each of your insurance companies to get quotes for bundling your policies.

3. Ask About Discounts.

In addition to bundling discounts, most homeowners insurance companies offer a variety of ways to save money. When shopping around, always ask what discounts you qualify for so that you can get the most accurate quotes before signing up.

And if you’re not shopping around, you can still call your current insurer and ask if there are any additional ways you can save. You might be asked questions about your home, which lead to discovering previously missed discounts. Or maybe something in your home and/or life has changed and you now qualify for discounts you previously couldn’t.


4. Increase Your Home’s Safety and/or Security Features.

This tip ties in with asking about discounts. Many insurance companies offer discounts for homeowners who have safety and/or security features on their property.

A fire alarm is a great example of a safety feature that can save you money. But did you know there are different types of fire alarms, which could qualify for different levels of discounts? An unmonitored fire alarm, which only alerts people who are present in the home of danger, is good.

But you might get deeper discounts if you have a monitored fire alarm. With a monitored alarm, an external company can immediately contact the homeowner or appropriate authorities when the alarm goes off. The same is true with other alarm systems, like a home alarm, that can be monitored or unmonitored.

In addition to alarms, making safety improvements (ex: replacing an old roof, adding impact-resistant windows/doors) to your home can help you qualify for discounts. You can always talk with a representative from your insurance company before you make updates to learn about potential savings.

5. Improve Your Credit Score.

The world of insurance is all about risk. You pay your insurer to take on the risk of protecting your property in the event of unexpected damages. But before an insurer agrees to take on the risk, they calculate just how risky they think you’ll be. And one of the factors some insurance companies look at is your credit score.

People with lower credit scores are typically associated with a higher risk of filing claims. This means lower credit leads to higher premiums. In fact, Bankrate found that, “someone with a poor credit score pays over 170 percent more for home insurance, on average, than someone with an excellent score.”

Check out our guide on ways to improve your credit score. And we’ve also got expert tips to take your score from good to great!

Final Thoughts

Increasing your homeowners insurance deductible is a quick way to lower your premium. But, it might not be the best or most cost-effective way. To find out just how much you might save by increasing your deductible, contact your insurance company. If you’re still paying off your home, make sure you know the maximum deductible allowed before changing yours.

Remember: You can’t file a claim for any amount that’s less than your deductible. And the deductible you choose might just be a starting point for any actual expenses you pay out-of-pocket. Increasing your deductible also increases your risk, and you never want to be caught with a deductible that you can’t afford.

“The reality is: Most people who are in a financial position to raise their deductible are in that roughly third of people who own their home free and clear — no mortgage,” says Clark. “And then it’s just a matter of you being partially self-insured with your home, and you take it up to the point where it’s the most efficient point to raise it.”

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