What are home insurance deductibles?

Complete Guide to Home Insurance Deductibles

Why This Question Matters for Colorado and Utah Residents

Home insurance deductibles are especially important in Colorado and Utah, where severe weather and property risks are on the rise. Understanding how deductibles work will help you strike the right balance between saving on premiums and planning for costs if you ever need to file a claim.

• Frequent severe weather: Colorado is the #2 state for hail claims nationwide, and Utah is seeing more wind and wildfire losses. Deductible choices can affect how much you owe after storms, fires, or floods.
• Significant premium increases: CO homeowners saw premiums rise over 50% from 2019–2022, with deductibles commonly set at $1,500–$5,000 or 1–2% of dwelling value to manage costs.
• Local regulations and options: Colorado law allows insurers to set a separate wind/hail deductible, which can be a flat dollar amount or a percentage of your home's value. Utah policies sometimes require higher minimum deductibles for high-risk zip codes.

What Most People Get Wrong

Many assume the lowest deductible is always safest or that they'll never have to pay it. In reality, the optimal deductible isn't one-size-fits-all—it depends on your emergency savings, claim history, and local risks.

Another common misconception: not realizing that a claim can trigger separate deductibles (like for hail vs. other damages) or that you might face different deductibles for different types of claims.

The Complete Picture

A home insurance deductible is the amount you pay out of pocket before your insurance pays the rest on a covered claim. For example, if you have a $2,000 deductible and suffer $10,000 in wind damage, you'd pay $2,000 and your insurer would cover the remaining $8,000.

Choosing a higher deductible can reduce your premiums—by 15–20% or more—but also means you need to have that amount available anytime a claim occurs. Colorado and Utah residents should be especially mindful of regional risks like hail or wildfire, and review their policies to see if they have a separate wind/hail deductible (which can be 1–2% of your dwelling coverage, sometimes $3,500–$7,000 or more).

Given rising premiums (the regional average is $3,320/year), many are shifting to higher deductibles out of necessity. It's crucial to ensure this amount fits your emergency plan, since multiple claims in a year could require you to pay the deductible more than once.

Making the Right Decision for Colorado and Utah Residents

Question 1: Can I comfortably afford my chosen deductible at a moment's notice?

Be honest about your emergency savings. If your deductible is $2,500, do you have quick access to those funds? Consider:

• The realistic likelihood of needing to file a claim (local hail, wildfire, water leak)
• Whether you can absorb the cost of multiple deductibles in a single year (for example, if both hail and water damage occur)

Question 2: Does my policy have separate or percentage-based deductibles for wind/hail?

Check your declarations page or ask your agent whether you have a flat (ex: $2,500) or percentage (ex: 1% of dwelling) deductible for certain perils. In Colorado, wind/hail deductibles are common and could mean a $5,000–$7,000 payment after a big storm.

Question 3: Am I balancing premium savings and claim costs based on local risk?

If your home is in hail alley (Denver metro, northern CO) or a wildfire-prone area, weigh the savings from a higher deductible against the likelihood of having to use it, especially as severe storms increase. Saving $600/year by raising your deductible is only wise if you won't be strained by a big out-of-pocket cost after a claim.