Deductibles 101: How Your Choice Changes Premiums and Claim Decisions

Understand flat vs percentage deductibles, wind/hail and hurricane deductibles, and a simple way to pick the right amount for your budget.

Deductible basics

A deductible is the amount you pay out of pocket on a covered loss before insurance contributes. Higher deductibles usually lower your premium because you’re taking on more small‑loss risk.

Policies may use a flat deductible (e.g., $1,000) and separate percentage deductibles for specific perils like wind/hail (e.g., 2% of dwelling).

Flat vs percentage examples

Flat: with a $1,000 deductible and $8,000 covered loss, you pay $1,000; the carrier pays $7,000.

Percentage: with a 2% wind/hail deductible on a $350,000 dwelling, your deductible is $7,000 for wind/hail claims. For non‑wind losses, the flat deductible applies.

How your choice affects premium

Moving from a $1,000 to $2,500 flat deductible can reduce premiums 10–20% depending on market and carrier appetite.

Raising wind/hail percentage lowers premium, but only do it if you can realistically cover that out‑of‑pocket during a storm season.

A practical way to pick your deductible

Pick the highest deductible that wouldn’t create financial stress if you had a loss tomorrow. Keep an emergency fund sized for that amount.

If you rarely file small claims, a higher deductible can make sense; too many small claims can raise rates or trigger non‑renewal.

Claims strategy

Don’t file claims below or barely above your deductible; it creates a record without meaningful payout. Consider whether the net benefit outweighs premium impacts before filing.

Document damage, get estimates, and talk with your agent about thresholds before submitting.

Takeaway

Your deductible is a lever: it controls premium and how you handle small vs big events. Choose a number you can truly cover, then revisit annually.