Understanding Tenant Insurance Deductibles: The Pros & Cons of a High vs Low Deductible

The amount you choose to pay as a deductible on your tenants insurance policy has a direct impact on your annual or monthly premiums. Because of that, it’s important to make sure you understand how they work, what it means to pay more or less as a deductible, and how to find the best choice for your needs. In this explorative guide, you’ll be able to do exactly that.

Continue reading to find out what level of deductible makes the most sense for you. 

What is a deductible on a tenant insurance policy?

When you make a successful claim on a tenant insurance policy, you’ll need to make an out-of-pocket payment to cover some of the expense. This amount is referred to as your deductible.

This payment is applied to the loss settlement. That means the insurer pays out the covered amount you qualify for, minus the deductible amount.  Not all coverages are subject to deductibles – so we suggest always making sure to check your policy first. 

Deductible applicability is determined by:

• The type of claim and your coverage section (contents, additional living expenses, liability coverage, etc.)

• The policy wording

You usually choose how much you want your deductible to be when you’re setting up your policy. Typically, the amount you opt for will be either $500, $1,000, or $2,500. In general, the higher your deductible amount, the less you pay for your monthly or annual premium.

How do deductibles work in tenant insurance?

Now you have a better idea of what a deductible is, let’s look at how they work in practice. Let’s use a random example:

Someone needs to make a claim after a fire damaged part of the property they rent. They decided they wanted to take out a $1,000 deductible when they set their agreement up. The claim is for $5,000 in total. In this scenario, the payment provider would give the claimant $4,000, with the first $1,000 being subtracted beforehand. 

This is a completely hypothetical scenario. The amount you pay will vary depending on your exact circumstances. If you need help understanding your policy better, always make sure to talk to your provider. If you’re an APOLLO customer, log into your customer portal to read the details of your agreement.

How much do people typically pay as a deductible on their tenants insurance?

As we’ve discussed, the amount you pay as a deductible is something you choose when you set up your policy. But what does that look like for the average policyholder? 

Across 2025, APOLLO Insurance found that the majority of tenants were taking out policies with $1,000 as their deductible payment. This represented as many as 80.97% of all customers.

Here’s a full breakdown of how APOLLO customers chose to set up deductible costs: 

• $500 - 14% 

• $1,000 - 81% 

• $2,500 - 5%

Figure: APOLLO Insurance, 2025 deductible amounts on tenant insurance policies 

While most policyholders decided for the middle-ground option, how much you choose to pay as a deductible is completely at your own discretion. 

How deductibles can affect your insurance premiums

Just as factors such as location, coverage customisations, and the type of building you live in affect how much your premiums will be, so too do deductibles. To get a rough idea of how much they might change depending on what level of cover you select, here are the average policy costs for APOLLO customers who chose varying deductible amounts in 2025: 

Based on the average cost of tenant insurance policies provided by APOLLO, segmented by deductible level, between January 1, 2025 and December 31, 2025.

Remember: deductibles are just one factor which decides your policy. For example, choosing a $500 deductible amount won’t guarantee you a $283 rate. It’s just that the amount you choose will have an impact on your overall policy. 

We already know that lower deductibles make monthly premiums higher, while higher deductibles make premiums lower. The relationship between the two stretches beyond just this, though. The size of your deductible might have an impact on how likely you are to make a claim if your property is damaged. 

Making a claim is sometimes unavoidable. But doing so will also mean you’re likely to face higher premiums in the future as a result. Those with a lower deductible might be tempted to claim, not realising that they could face a hike on their monthly or annual payments as a result. This could lead to anywhere from a 15%-50% increase. 

If you want to protect your premiums, even in the event of a claim, consider selecting APOLLO+ when you sign up for a policy. For just $4 a month, this service locks in your rate on your first renewal, offers forgiveness on one claim, and even allows you to adjust your monthly payment date up to 3 times a year. 

Is it better to pay a higher or lower deductible on tenant insurance?

Whether you choose to pay a higher or lower amount will depend on what your preferences are for managing the costs of your policy. The best way to discover which works for you is to understand the advantages and drawbacks of both kinds of deductibles. 

The pros and cons of a higher deductible

Pros of a higher deductible 

• Lower monthly premiums. The most obvious advantage of a high deductible is lower premiums. Tenants who opt for a high deductible will pay less on a monthly or annual basis for coverage. This offers flexibility for renters, freeing up money without sacrificing the protection afforded by tenant insurance. 

• Small claims reductions. A higher deductible makes it less likely someone might be tempted to apply for smaller insurance claims. This benefits a policyholder, as a series of claims (however large or small) can affect future premiums, and even see them experience non-renewal in extreme cases. 

• Coverage for catastrophic events. Higher deductibles usually mean tenants pay smaller premiums for larger, more catastrophic levels of cover. That extends to factors such as floods and fires. 

Cons of a higher deductible

• A higher out-of-pocket expense. With a higher deductible policy, you will need to cover more money yourself in the event of a claim. This can be particularly challenging if you have a deductible of $2,500 or more. 

• Deductibles are per-incident. Most of the time, deductibles will apply to each incident you’re claiming for. That means if you have more than one claim in a short period of time, you’ll have money removed from the claim amount for each incident. 

• Less effective for minor claims. While it can sometimes be good not to claim for smaller incidents, it may also be unavoidable. If that’s the case, a higher deductible amount makes these kinds of claims less practical. 

The pros and cons of a lower deductible 

Pros of a lower deductible 

• Lower out-of-pocket costs. The major benefit of taking out a policy with a lower deductible is the small upfront cost you’ll be asked to pay in the event of a claim. This is usually the most attractive feature of the policy.  

• Less financial pressure during the claim. Having to pay a smaller sum immediately when you claim means that you won’t be scrambling to find as much money on day one.

• Faster recovery. You’ll be able to recover quicker from a disaster, thanks to more money still in your pocket. That makes the job of replacing damaged items you immediately need simpler and more affordable. 

Cons of a lower deductible

• Higher premiums. You’re going to have to pay more money as part of your regular premiums. That’s true whether you’re paying every month, or as one annual lump sum. This can add up quite a lot over time, especially if you never end up making a claim. 

• Higher likelihood to make a claim. A smaller upfront cost means it’s more likely someone will make a claim. While this isn’t necessarily a bad decision, it could be if the amount you’re claiming for is something you can afford to cover out of pocket – remembering that claims will increase your premiums heading forwards. 

How do I choose a deductible that’s right for me?

There’s no right or wrong figure to pay as your deductible. The key is to find the amount which best works for your exact situation – regardless of whether that’s a high or low upfront cost. If you’re struggling to decide, keep the following in mind: 

• The size of your emergency fund. How much money you have set aside for emergencies can play a big part in your decision. If you know you can comfortably afford a larger payout to enable smaller monthly premiums, it might be a good choice. 

• How much you’re willing to pay for premiums. Regardless of the deductible, it’s the premiums you have to find money for every month. That’s true whether you make a claim or not. That makes it a big factor in deciding whether you want to absorb more costs now or later. 

• Your “risk profile”. How risky you might be to insure is something a lot of insurance companies consider when offering you a policy. But it’s also something you can keep in mind. If you live in an area which is more prone to flooding, or even in a building which is more susceptible to theft, a lower deductible might make sense for you, as your chances of making a claim are higher. 

It’s ultimately your decision what you want to prioritise. For a quick way to think about what both offer, here’s a brief summary of what we’ve already discussed:

Does what I want to cover change my deductible amount?

Each policy you’re offered will be different. There’s no hard-and-fast rule that says having certain items covered will mean you pay more for your deductible amount. However, it is true that some policies might ask you to cover more if items are particularly expensive. 

You may find that you’re asked to pay higher deductibles for specific items, but a lower amount for everything else that your policy covers. It could also be that certain incidents require additional deductible amounts if you live in an area where floods or wildfires are common. 

Always check with your policy provider what options are available to you. 

Find the perfect deductible with tenant insurance offered by APOLLO

If you’re searching for affordable tenant insurance which helps with the costs of replacing damaged items, consider a policy provided by APOLLO. You’ll be able to get a full quote and finish your purchase within 2 minutes – all while taking advantage of the only tenant insurance with a Best Price Guarantee*. What’s more, we’ll also help guide customers through the claims process if the need does arise. Don’t delay, get a quote today. 

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