How Do Insurance Deductibles Work?

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Updated October 30, 2026.

General education, not a coverage determination or a promise of savings. Terms, limits, deductibles, exclusions, eligibility and discounts vary by state, carrier and policy. Examples are illustrative. Your issued policy and endorsements control; an agent can help review them. Serving OH, PA, MI, TN, AZ and IN, subject to product availability.

The amount you share in a covered loss

A deductible is the portion of a covered loss you are responsible for under the policy. It does not create coverage for an excluded event. Limits and settlement terms still apply.

A simple dollar example

For an otherwise covered $4,000 repair with a $1,000 deductible, the potential payment would be $3,000 before other policy adjustments. This is an illustration, not a claim estimate.

Percentage deductibles need a different calculation

A percentage deductible may be based on the insured dwelling limit rather than the size of the loss. If the applicable deductible is 2% of a $300,000 dwelling limit, it would be $6,000. Read the actual wording to confirm the basis and when it applies.

Can one policy have several deductibles?

Yes. Auto collision and comprehensive may have different amounts. Home policies may use a separate deductible for wind or hail. Optional coverages may also have their own amounts or rules. Check each relevant coverage.

Should I choose a higher deductible?

Ask for the actual premium difference, then compare it with the additional amount you could pay after a loss. Keep an amount you can reasonably manage and check lender or lease requirements. A lower premium can shift more cost to you.

Does every claim have a deductible?

No. It depends on the coverage and policy. Do not assume your property deductible also applies to liability claims.

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