Deductible
The amount of a claim you pay yourself before the insurance kicks in.
The amount of a claim you pay yourself before the insurance kicks in.
The deductible is your first slice of every loss: on a $4,000 repair with a $1,000 deductible, the insurer pays $3,000. Choosing it is a bet on frequency - higher deductibles cut the premium because you absorb more small claims yourself, and they work best when you could comfortably fund the deductible from savings on a bad day. Most auto policies reset the deductible per claim, some per policy term; home policies may apply separate or percentage deductibles per event.
Percentage deductibles change the arithmetic completely: on a $400,000 home with a 2% wind deductible, your first $8,000 of storm damage is yours before coverage starts - a number people discover during hurricane season, not during the quote. Claims frequency also matters: two small claims in a few years can raise premiums or make renewal harder, which quietly moves minor damage from the insurance column to the pay-it-yourself column.
Worked example
Raising an auto deductible from $500 to $1,000 might save 15-20% a year - $150 on a $750 policy. You are self-insuring the next $500 of damage in exchange for $150 annually, a good trade only if such claims stay genuinely rare.
Related terms and tools
Coinsurance, Auto insurance calculator, Auto insurance guide
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