An insurance deductible is the amount you must pay before the insurance company will pay their portion in a claim scenario. After you’ve paid your deductible, the insurance company will start paying the remaining amount of the claim value up to the limits indicated in the policy. A higher deductible generally means a lower premium for the policy, but it also means you’ll have to pay more out of pocket if you file a claim. What type of deductible do you have?

A deductible may be a specific dollar amount, or it may be a percentage. It is important to understand the difference between the two and how both translate to an actual dollar amount. For example, for a home that is insured for $150,000:
- With a $500 dollar deductible, if the roof is damaged by a hailstorm and the cost is $8,000 for repairs, your policy will pay $7,500 and you are responsible for $500.
- With a 5% deductible ($7,500), insurance will pay $500, and you are responsible for the deductible.
- If the amount for repairs is less than the deductible, insurance will not pay anything.
It is also important to note that home and auto policy deductibles work differently than deductibles for health insurance. For health insurance, the deductible usually covers a year. With home and auto policies, the deductible is applied to each claim you file. If you have a car accident in March and you file another claim in August, the insurance company will subtract the same deductible amount from the damages of each claim before paying the claim.
When making the decision about a deductible, consider what is right for you. In general, the higher the deductible, the lower the cost of the policy. Examine your financial situation and think about how much you can afford to pay out of pocket if you file a claim. Filing multiple small claims may affect your future premiums so consider that as well. If you make the decision in favor of a higher deductible, you may save on the cost of your insurance premiums, but make sure you have the funds to pay your deductible.
Your insurance deductible is stated in the terms and conditions section of your policy. Make sure to understand the section fully. If it is not clear to you, ask your insurance agent so you will know how much your deductible is. Give us a call at Sanger Insurance with any questions you might have about commercial or personal insurance. We proudly serve all the North Texas area and would love to earn your business and your trust.