Guide to add-ons in a home insurance policy

Homeownership comes with many responsibilities, all focused on protecting your forever home. Today, many homeowners opt for insurance policies that adapt to new and emerging risks. The right plan can safeguard your finances if your property suffers a loss. While premiums may seem high, choosing an appropriate deductible can help control costs and support smarter, more responsible homeownership.

This article breaks down how understanding and using deductibles can make protecting your home both practical and affordable.

What is the meaning of deductibles in home insurance?

A homeowner's insurance deductible is the amount you pay from your pocket before your insurance company covers the rest of the claim for your losses. These deductibles apply differently with every claim.

For example, if your house insurance deductible is ₹25,000 and you incur damages amounting to ₹1,00,000, you pay ₹25,000 and your insurer pays ₹75,000.

How do home insurance deductibles work?

Here’s what to keep in mind about home insurance deductibles:

1. Deductibles apply on a per-claim basis, meaning you pay the deductible amount for every separate claim you make within the policy period.
2. If a single claim involves multiple elements covered by the policy (e.g., the house structure, personal property and garage damaged by fire), you pay the deductible only once for that single claim.
3. Deductibles can be a fixed amount (e.g., ₹15,000) or a percentage of the sum insured (e.g., 2% of the insured value).
4. The homeowners' insurance deductible re-applies with every new claim within the policy period.
5. A high deductible home insurance plan reduces premiums, while a low deductible raises them.

When do home insurance deductibles apply?

A home insurance deductible applies whenever you file a claim for a loss, such as fire, theft or certain natural disasters. You pay the deductible amount out-of-pocket, and the insurer covers the remaining costs. Deductibles are required per claim and only come into effect for damages or losses that your policy specifically covers.

Types of deductibles in home insurance

There are different types of home insurance deductibles, and each one determines how much you will need to pay when making a claim.

• Fixed Deductible

• A fixed amount you pay per claim.
• Example: For a homeowners insurance deductible of ₹10,000 on a ₹50,000 claim, you pay ₹10,000, and the insurer pays ₹40,000.

• Percentage-Based Deductible

• A percentage of your insured home value.
• Example: For an insured value of ₹20,00,000 with 2% deductible, you pay ₹40,000.

• Split or Hybrid Deductible

• A combination of fixed and percentage deductibles.
• Example: Fixed deductible of ₹15,000 for most claims, but 2% for flood damage.

• Specific Deductibles

• Additional deductibles for certain instances, like hurricanes or theft.

• Voluntary Deductibles

• Homeowners choose a higher deductible to reduce premiums. This results in a bigger financial risk but lower annual premium costs.

Impact of deductibles on home insurance premiums & claims

The type of deductible you choose significantly impacts both insurance premiums and claim settlements.

• High-deductible homeowners insurance has lower monthly premiums but higher out-of-pocket claims costs. It is ideal for people willing to assume more financial risk.
• Low-deductible home insurance has higher monthly premiums but less burden during emergencies.
• The average deductible for home insurance typically ranges from ₹10,000 to ₹50,000 in India.
• The best deductible for home insurance is one that balances your budget while ensuring you won’t be financially strained if disaster strikes.

Conclusion

Your house insurance deductible affects both your premium and the amount you pay when making a claim. A lower deductible results in high premiums and low claim expenses, whereas a higher deductible reduces premiums but increases your share of costs.

The best option depends on your budget, risk comfort and capacity to handle sudden expenses. It may be a wise decision to choose an insurance plan with deductibles to provide adequate protection without putting unnecessary pressure on your finances.

FAQs

• What is a good deductible for home insurance?

A good deductible balances affordable premiums with manageable out-of-pocket costs during claims.

• What is the average deductible for home insurance?

It usually ranges between ₹25,000 and ₹50,000, depending on policy and insurer.

• Is low deductible home insurance better?

Low deductible home insurance means higher premiums but less out-of-pocket payment during emergencies, offering better short-term protection.

Disclaimer: The information provided in this blog is for educational and informational purposes only. It may contain outdated data and information regarding the topic featured in the article. It is advised to verify the currency and relevance of the data and information before taking any major steps. ICICI Lombard is not liable for any inaccuracies or consequences resulting from the use of this outdated information.