You probably know that homeowners' insurance policies carry what is known as a deductible. The deductible is the amount of money that the insurer subtracts from the value of your loss before settling your claim. What you might not know, however, is that there are different forms of deductibles; they tend to vary by policies or insurers. Here are some of the common forms of home insurance deductibles:

Lump-Sum Deductible

The lump-sum deductible is a specific amount of money that the insurer deducts before settling your claim. For example, if you have a $500 deductible, then this is the amount that will be deducted from each approved claim before the claim check is written. Insurers tend to have a minimum deductible that each homeowner must have, but a policyholder may increase the amount.

The best thing about this lump-sum deductible is that you know exactly how much you must pay out of your pocket whenever you suffer a covered loss. The amount won't change whether you suffer a $1,000 or $25,000 loss. As you can see, it will benefit you in case you suffer a big loss but not if you are dealing with a small loss.

Percentage Deductible

Just like the name suggests, the percentage deductible is given as a percentage of the loss you are claiming. For example, if you have a 10% deductible, then your claim will be reduced by 10% every time you suffer a loss. So if the wind damages your roof and you require $3,000, the insurer will only give you $2,700; if the damage is valued at $20,000, you will get %18,000 when your claim is approved. Most people will agree that the percentage deductible is not a good deal for big losses.

Straight Deductible

This form of deductible applies to each separate loss if you suffer multiple losses. For example, if you suffer wind damage this week and then have your belongings stolen a few weeks later, both the wind damage claim and the theft claim will be subject to separate deductibles. Take an example where you have a $500 deductible. If you suffer wind damage valued at $5,000 and a burglary case valued $1,000, you will get $4,500 and $500 for the wind damage and theft claims, respectively.

Aggregate Deductible

Lastly, there is also aggregate deductible is the opposite of a straight deductible. In this case, multiple losses are lumped together and subjected to one deductible. Still using the example of wind and theft losses above, the $5,000 wind damage loss and $1,000 theft case will be summed up and subjected to a single deductible. This means you will get $5,500 (add $5,000 to $1,000 and subtract $500 from their sum) for your combined losses, instead of the $5,000 you would receive in the case of a straight deductible.

Therefore, don't just focus on the amount of the deductible the next time you are renewing or buying your home insurance policy. Evaluate the formats of the different deductibles to help you choose the best one for your situation. Contact a company like Martin Insurance Company to learn more.