One of the best ways to save money on your homeowners insurance coverage is by understanding how your homeowners insurance deductible works.By definition, a homeowners insurance deductible represents your share of the insured risk in an insurance contract.It’s the money you’ll have to pony up to repair or replace a covered loss.

In other words, you file a claim and your insurance company deducts your share of the risk from the benefit pay-out.Imagine you just bought a new home and are going to purchase to protect your investment.How do you know whether or not to go with a high or a low deductible? The right answer is fairly nuanced and depends upon your particular situation.Homeowners Insurance Deductible OptionsYour homeowners insurance deductible is the amount you have to pay out-of-pocket toward any damages or loss that your homeowners insurance provider will pay for a claim.Unlike other forms of insurance, you don’t actually have to pay the deductible up front.

Instead, the insurer will subtract the deductible cost out of the claim.So, if you file a claim for $15,000 and your deductible is $500, you’ll pay $500 towards repairs and the insurer will pay $14,500.Generally, there are two types of deductibles:Dollar amount – The deductible is a set amount of money, such as $500 or more.Percentage – The deductible is a set percentage of the total amount of coverage provided by your policy.For example, if you insure your home for $300,000 with a 2% deductible, you’d pay $6,000 towards fixing the damages while the insurer would pay the remaining $294,000.