The Pros and Cons of a High Deductible Tenant Insurance Policy

Choosing your tenant insurance deductible affects your monthly premium, out-of-pocket costs, and peace of mind. In this guide, we walk through the real-world trade-offs, financial scenarios, and how to find the sweet spot that fits your budget and lifestyle.

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What Is a Deductible?

A deductible is the amount you agree to cover out-of-pocket before your insurance provider starts paying. For renters insurance, this typically applies to personal property and liability claims. Deductible options usually range from $250 to $2,500+.

Understanding this balance is critical: a lower deductible means you'll pay less upfront for each claim, but your monthly payment is higher. Conversely, a higher deductible reduces your monthly expense, but increases the financial burden if you need to use your coverage.

What Is a High Deductible Tenant Insurance Policy?

A tenant insurance policy with a high deductible is a policy that requires the policyholder to pay a higher amount out of pocket before they can cash in on their policy. Deductibles typically range from $500 to $2,500 or more. The higher the deductible, the lower the monthly premiums. This type of policy is ideal for renters who want to save money on monthly premiums but are willing to pay more out of pocket in the event of a claim.

Related Read: When Should You Review Your Insurance Premium?

The Pros of a High Deductible Tenant Insurance Policy

Lower monthly premiums

The biggest advantage of a high deductible tenant insurance policy is the lower monthly premiums. Tenants who opt for a high deductible policy can save a lot of money over time on insurance premiums. This can be especially beneficial for renters who are on a tight budget and want to reduce their monthly expenses.

Encourages responsible behaviour

A high deductible plan is good because it can also encourage tenants to be more responsible with their belongings. Knowing that they will have to pay a higher deductible in the event of a claim can motivate tenants to take better care of their possessions and avoid risky behaviour. This can ultimately lead to fewer claims and lower insurance costs for everyone.

Protection against catastrophic events

A high deductible policy can also provide protection against catastrophic events. If a tenant experiences a major loss due to a fire, flood or other natural disaster, a high deductible policy can help cover the costs of replacement or repair. While the tenant will have to pay a higher deductible, the insurance company will cover the majority of the costs, which can be a lifesaver in a time of crisis.

Related Read: Top 10 Reasons Why Your Tenant Insurance Claim May Be Denied

The Cons of a High Deductible Tenant Insurance Policy

Higher out of pocket expenses

The biggest disadvantage of a high deductible tenant insurance policy is the higher out of pocket expenses. Tenants who choose a high deductible policy will have to pay more in the event of a claim. This can be a burden for renters who are already struggling to make ends meet. It is important for tenants to carefully consider their financial situation before choosing a high deductible policy.

Limited coverage

Another potential downside of a high deductible policy is limited coverage. Some insurance companies may offer lower coverage limits for high deductible policies, which can leave tenants vulnerable in the event of a major loss. It is important for tenants to carefully review the coverage options before choosing a high deductible policy.

Related Read: FAQs About Tenant Insurance

Risk of under-insurance

A high deductible policy can also increase the risk of under-insurance. If a tenant chooses a high deductible policy with lower coverage limits, they may not have enough insurance to cover the full cost of a loss. This can leave tenants in a difficult financial situation and unable to replace their belongings. It’s important for tenants to carefully consider their insurance needs and choose a policy that provides adequate coverage.

Pros & Cons Summary

High Deductible (e.g. $1,000 or more)

• Pro: Lower monthly premiums

• Pro: Encourages fewer claims and better risk management

• Con: Could be a financial stress if you need to claim

Low Deductible (e.g. $250–500)

• Pro: Smaller out-of-pocket cost when filing

• Pro: Faster repair or replacement timeline

• Con: Higher premiums over time may outweigh small claim usage

How Claims Affect Premiums

Be mindful that filing small claims can lead to:

• Higher future premiums—even for minor items

• Policy non-renewal risk if you file often

• Example: A $600 claim on a $500 deductible may seem small—but insurers often penalize a frequent claims history over time.

Sometimes, it's smarter financially (and strategically) to self-cover minor expenses, rather than risk long-term premium hikes.

Should I Go for a High or Low Deductible?

There’s no single “best” deductible, it’s all about your financial comfort and claim frequency. If you can handle the risk and want to save each month, a high deductible might be your best move. But if budget security and faster payouts matter more, a low deductible can give you confidence. Tenants should review their personal coverage options and deductibles carefully to ensure that they have adequate insurance coverage in the event of a loss.

Read our article Do I Have to Pay a Deductible When Making a Claim? for more information.

APOLLO is Canada’s leading provider of tenant insurance, tailored specifically for renters and customizable to fit your unique lifestyle. Get your free quote in less than a minute and we’ll send your policy documents right to your inbox.

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