What Is an Insurance Deductible?

Understanding your insurance deductible helps you make smart coverage decisions and avoid financial surprises when filing a claim. The information in this guide is to help you choose the right deductible for your situation.

What is a Deductible in Insurance?

A deductible in insurance is the amount you pay out of pocket before your insurance coverage is applied. Think of it as your share of the financial responsibility when something goes wrong.

Here's a simple example: If you have a $1,000 deductible and a covered fire causes $5,000 in damage, you pay the first $1,000 and your insurer pays the remaining $4,000.

How Deductibles Affect Your Premium: Higher deductibles mean lower premiums, which allows you to save on your annual premium, but pay more when filing claims. Lower deductibles mean higher premiums, so you pay more on your annual premium but less when filing claims.

When Your Deductible Applies: Your deductible applies when you file a claim for covered losses. It does NOT apply to regular premium payments or liability payments to others.

What Are the Most Common Types of Insurance Deductibles?

Different insurance policies use different deductible structures based on the risks they cover.

Home Insurance Deductibles

Home insurance is unique because it often has separate deductibles for different types of damage.

Standard (or "All-Peril") Deductible: A flat dollar amount covering common perils like fire, theft, and vandalism. Slide offers deductible amounts ranging from $500 - $10,000 depending on the policy type. The standard home insurance deductibles are typically per claim (per occurrence), meaning you must pay the deductible each time you file a covered loss.

Percentage Deductibles (Hurricane/Wind): In coastal states with hurricane risk like Florida and South Carolina, these are typically calculated as a percentage of your home's insured value. Slide offers both flat dollar amounts ($500 and $1,000) or percentages ranging from 1-10%; however, the most common hurricane deductible is 2%.

Example: if your home is insured for $300,000 with a 2% hurricane deductible, you would be responsible for $6,000 before your insurance kicks in for a covered loss. If you had a flat $1,000 deductible, you would be responsible for $1,000 before your insurance kicks in for the same loss.

After your first hurricane claim, if another hurricane hits the same calendar year, you'll typically pay either the remaining balance of your calendar year hurricane deductible or your standard deductible—whichever is greater.

Optional Coverage Deductibles: Specialized endorsements / additional coverage such as sinkhole, water backup and sump pump overflow, service line enhancement, or equipment breakdown, will have their own separate deductibles.

Auto Insurance Deductibles

An auto insurance deductible is the amount you pay out of pocket on a covered claim (like collision or comprehensive) before your insurer pays the remaining repair or replacement costs. Similar to standard home insurance deductibles, auto insurance deductibles are per claim (per incident), not annual. That means you pay the deductible each time you file a covered collision or comprehensive claim, even if you’ve already paid one earlier in the policy year.

Health Insurance Deductibles

Your health insurance deductible is the amount you must pay for covered health services per year before your plan begins to pay. Health insurance deductibles are usually annual (per plan year)—you pay covered medical costs out of pocket until you hit the deductible, then the plan starts sharing costs through copays or coinsurance.

A Deeper Look into Deductibles in Home Insurance

Now that we've covered the basics, let's focus on how to determine the right deductible for your needs and budget.

Dollar Amount vs. Percentage Deductibles

A flat $1,000 deductible is easy to budget for. A 3% hurricane deductible on a $350,000 home equals $10,500, requiring a much larger emergency fund.

Example: With a $2,500 standard deductible and $12,000 in covered fire damage, you pay $2,500, and insurance covers $9,500. With a 3% hurricane deductible and $25,000 in covered hurricane damage, you pay $10,500, and insurance covers $14,500.

Why Do I Have a Separate Hurricane Deductible?

Hurricane deductibles help insurers manage the risk of catastrophic storms in coastal states. This risk-sharing helps keep insurance available and premiums manageable.

In Florida, the hurricane deductible applies to wind damage from a named storm. It is triggered when the National Hurricane Center issues a hurricane watch or warning and remains in effect until 72 hours after the watch or warning ends.

Flood Insurance Deductibles Are Separate

Standard homeowners insurance doesn't cover floods, including flooding from rising or tidal waves or excessive rain. Flood insurance is a separate policy, often with two deductibles — one for the building and one for contents.

If both wind and flood damage occur during a hurricane, you’ll file separate claims with your home insurance and flood insurance companies - each with separate deductibles.

When Do I Pay a Deductible?

You don’t pay your deductible directly to the insurer. Instead, the deductible amount is subtracted from your claim payout, and you cover that portion of the repair costs out of pocket.

Scenario 1: The Claim is More Than Your Deductible

The insurance company subtracts your deductible from the settlement check. With $10,000 in approved repairs and a $1,000 deductible, you receive $9,000. You pay your contractor the full $10,000 for the repairs using the $9,000 from insurance and $1,000 from your pocket.

Scenario 2: The Claim is Less Than Your Deductible

With $800 in damage and a $1,000 deductible, you wouldn't receive a claim payment, since the repair costs less than your deductible.

Is a High Deductible Better? How to Choose the Right Amount

The Case for a Lower Deductible

Pros: Less out-of-pocket expense when filing claims; peace of mind in hurricane-prone areas. A smart choice if you do not have the money saved to repair your home if you experience a loss.

Cons: Higher premiums; costs may exceed savings over the years without claims.

The Case for a Higher Deductible

Pros: Lower annual insurance costs; long-term savings if you don’t experience covered losses.

Cons: Higher out-of-pocket costs when disaster strikes; requires a sufficient emergency fund.

How to Decide

Rule #1: Check Your Emergency Fund. Never choose a deductible amount that is higher than what you can afford to pay in cash tomorrow.

Rule #2: Do the Math. If raising your deductible from $1,000 to $2,500 saves you $200 annually, it takes 7.5 years without claims to break even. Is the annual savings worth the added risk?

Your Policy, Your Way: Finding the Right Balance

The right deductible balances affordable premiums with manageable out-of-pocket costs.

Flexible Coverage: Slide lets you customize deductibles and coverage limits to match your risks and budget, whether that's a lower deductible for peace of mind or a higher one to save on your annual premium.

Financial Stability: In states like Florida and South Carolina, where hurricane risk is real and frequent, Slide's financial strength ensures we're here to pay claims when disaster strikes.

It’s Your Claim. Your Way. We offer self-service options and live claim assistance, so you get the support you need, when and how you need it. From digital claim submissions to working with vetted contractors, we guide you through every step.

Ready to customize your home insurance coverage? Get a free quote to see how Slide can fit your needs and budget.