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Whether someone ransacked your home during a break-in or swiped valuables from your car, homeowners insurance can help you recover financially from the ordeal. In general, a policy will pay to replace stolen or damaged belongings and repair damages from the theft, up to your coverage limit.

As with other types of insurance, there are nuances to keep in mind. Let’s dive in.

What Does Homeowners Insurance Cover When Property is Stolen?

As we mentioned, standard homeowners insurance policies usually cover the cost of repairing or replacing personal property that was stolen from your home, outside your home, or from a car or storage unit. Here’s a closer look at each scenario.

Theft of Personal Property From Your Home

If belongings are taken from your home, your policy will typically pay for the cost of repairing or replacing them, up to a point. A homeowners insurance policy generally includes a percentage — often between 50% to 70% — for personal property coverage. So, for example, if your policy’s total dwelling limit is $500,000, you’ll have anywhere from $250,000 to $350,000 in personal property coverage.

Recommended: Homeowners Insurance Terms

Belongings Stolen Outside Your Home

Your homeowners insurance should also cover your belongings if they are stolen while outside of your home, including when you’re traveling. Personal property outside your home is usually covered up to 10 percent of your personal property coverage limit or $1,000, whichever is higher.

Items Stolen From a Car or Storage Unit

Many people may think theft from your car would be covered under your auto insurance policy, but it is actually your homeowners insurance that steps in here. While a comprehensive auto insurance policy can protect you if the car itself is stolen, it won’t help pay to replace personal property stolen from inside your car. This would fall under personal property coverage in a homeowners insurance policy.

Homeowners insurance should also cover theft of your personal property in a storage unit.

How Do I File a Theft Claim?

If you need to file a theft claim with your home insurance, be sure to check out your homeowners insurance guide and follow the company’s protocols. These steps can also help.

Immediate Steps to Take After a Theft

First thing first: Ensure that you — and the remainder of your belongings — are safe. Then, call the police to file a police report for theft. You should also take pictures of the area, start making a list of all stolen property and start gathering necessary documentation.

Documentation Needed for Your Claim

Your insurance company will likely require proof of the theft, and a police report can serve that purpose. Any other documentation you have, like appraisals, pictures of the items or other proof, should also be submitted with the insurance claim.

The Claims Timeline and Process

The claims process usually begins with documenting the damage and stolen property, and reporting the incident to your insurance company. The insurer will likely assign an insurance adjuster to assess the damage, review the policy, and provide a settlement estimate.

You will receive payment for the approved amount, minus your deductible. Keep in mind that It can take weeks or months to fully resolve a claim, depending on the company, the complexity of the claim, and the location of the claim.

Recommended: How to Buy Homeowners Insurance

What Theft May Not Be Covered?

Not all theft will be covered by homeowners insurance. Most standard homeowners insurance policies have standard policy exclusions. Theft from a home under construction and theft by a resident of the household, for example, are generally not covered by homeowners insurance. Let’s take a closer look at both scenarios.

Standard Policy Exclusions

Most policies have sub-limits for expensive items like jewelry, furs, firearms, art, or collectibles. Coverage for cash, checks, or money orders that are stolen from your home is also often limited or excluded, as are items used for business purposes.

Most policies also will not cover theft resulting from negligence (like leaving your doors unlocked) or for losses that occur when the home is left vacant for extended periods (like if you reside in a second home for part of the year).

Theft from a Home Under Construction

Standard homeowners insurance policies usually do not cover theft from a home while it is under construction. You can get a “Home Under Construction” rider to your homeowners policy if you have a short term home construction project. A Home Under Construction rider covers losses from such perils as fires, storms, burst pipes, and theft.

If you are building a new home or have a longer construction period, you will need to get a separate builder’s risk policy during construction.

Theft by a Resident of the Household

Homeowners insurance likely will not cover theft committed by a resident of the insured’s own household. Insurance policies are designed to protect against theft by outside parties, so someone living in your household would typically be excluded.

Understanding Your Theft Coverage Limits and Deductibles

Homeowners insurance should cover theft, but how much it actually covers is determined by your policy’s theft coverage limits and deductibles.

Your Overall Personal Property Limit

Your overall personal property limit is usually a percentage of your dwelling coverage. This will vary by policy and is determined partly by whether you have an actual cash value or replacement cost value policy.

Replacement cost value is the amount it will take to replace your personal property without any deduction for depreciation of the items. Actual cash value is the replacement cost value amount, minus depreciation.

Special Sublimits for High-Value Items

If you have high-value items, you may want to consider supplementing your coverage. Scheduled personal property coverage covers expensive items, collectibles, or antiques. Some high-value items, like jewelry, have special sublimits due to their likelihood to be stolen.

If you have a high-value item that you want scheduled under insurance, you’ll need to have it appraised. Scheduling may expand the range of events you are covered for and often includes replacement should you lose the item. Common coverage sublimits are usually capped at $1,000-$2,500 for jewelry or watches, $2,000 to $3,000 for firearms, $2,500 silverware, and $200-$500 for coins and precious metals.

How Your Deductible Affects a Theft Claim Payout

As we discussed, once your claim is approved, you will receive a payout for the cost of the stolen items, minus your deductible. If you have an actual cash value policy, the payout will also subtract the depreciation amount from your payout.

Your homeowners insurance rate may increase after you successfully file a homeowners insurance theft claim. The severity of the claim can impact the amount of the increase.

The Takeaway

No one wants to experience theft, but thankfully you should have some coverage if you have homeowners insurance and the circumstances meet the included criteria. Theft coverage is something that to consider when you’re comparing homeowners insurance policies. There may be nuances with each policy, but an agent can walk you through the details.

If you’re a new homebuyer, SoFi Protect can help you look into your insurance options. SoFi and Lemonade offer homeowners insurance that requires no brokers and no paperwork. Secure the coverage that works best for you and your home.

FAQ

Is my property covered if it’s stolen from my car or while traveling?

Generally speaking, your personal property is covered by your homeowners insurance if it is stolen from your car or while you are traveling.

Are expensive items like jewelry or firearms fully covered against theft?

Expensive items like jewelry or firearms are usually not fully covered by standard homeowners insurance against theft. Most homeowners insurance policies have sub-limits that place a low maximum payout on theft of valuables.

If you want protection against expensive items, you should purchase additional coverage through an endorsement or a separate insurance policy.

What’s the difference between replacement cost (RCV) and actual cash value (ACV)?

Replacement cost value is the amount that it will take to replace your personal property without any deduction for depreciation of the items. Actual cash value is the replacement cost value amount, minus depreciation.

Do I need a police report to file a theft claim?

Yes, you’ll likely need a police report to file a theft claim with your homeowners insurance. Your insurance company may require proof of the theft, and a police report can serve that purpose.

Will my rates go up after filing a homeowners insurance theft claim?

Your homeowners insurance rate may increase after filing a homeowners insurance theft claim. The severity of the claim can impact the amount of the increase.

photo credit: iStock/KatarzynaBialasiewicz
Auto Insurance: Must have a valid driver’s license. Not available in all states.
Home and Renters Insurance: Insurance not available in all states.
Experian is a registered trademark of Experian.
SoFi Insurance Agency, LLC. (“”SoFi””) is compensated by Experian for each customer who purchases a policy through the SoFi-Experian partnership.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SOPRO-Q325-018

Your homeowners insurance doesn’t just protect your home — it may also offer some protection for your belongings stored in a storage unit. That coverage can provide peace of mind if you’re storing valuables off site. But it’s important to know that coverage may be limited and might not cover everything in your storage unit.

How Homeowners Insurance Covers Items in a Storage Unit

Most standard homeowners insurance policies cover a portion of your belongings while they are in a storage unit. The insurance coverage limit for your belongings in storage is usually a set percentage of your homeowners insurance policy’s personal property coverage limit.

Off-Premises Personal Property Coverage

It’s common for homeowners insurance policies to include off-premise personal property coverage, which can be applied to items in storage. However, you can usually only claim up to 10% of your personal property coverage amount.

For example, if you have $100,000 in personal property coverage for valuables inside your home, then your policy would generally cover up to $10,000 for belongings in your storage unit.

Protection Against Covered Perils

If your homeowners insurance covers items in a storage unit, there will usually be covered perils and uncovered perils. Insurance will likely cover damage done to items in a storage unit from theft, vandalism and weather events. However, if your possessions are damaged by mold or mildew while in a storage unit, your homeowners insurance may not cover the cost.

Coverage for Your Belongings vs. the Unit Itself

Homeowners insurance covers belongings stored in a storage unit but it doesn’t extend to the storage unit itself.

Recommended: Homeowners Insurance Terms

How do I File a Claim for Items in a Storage Unit?

Figuring out how to buy homeowners insurance is one important process for homeowners to understand. Learning how to file a claim is another. Here are some steps to keep in mind.

Immediate Steps to Take After Damage or Theft

If you notice belongings are destroyed or missing from your storage unit, alert the manager or security at the storage facility. They can secure the area and help protect it against further damage or theft.

If someone broke into your unit, report it to the police as soon as you can.

Documentation Needed for Your Claim

Your insurance company will probably require pictures of the damage or theft for your claim. You should also make a list of whatever was destroyed or stolen and provide their proof of value, if possible.

If your storage unit was broken into, you may also be asked to provide a screenshot of the security footage at the time of the break-in. The storage facility can provide that to you, along with paperwork and information needed to file a claim. Also get a copy of the police report, if you filed one.

Before submitting your claim, review your plan’s terms and conditions. A homeowners insurance guide can help you fully understand your policy.

The Claims Timeline and Process

Once the claim is submitted, your insurance company may assign an adjuster to work with you. Be sure to provide any documentation they request — it will help keep the process moving along. Note that claims can take anywhere from a few days to a few weeks to be processed, depending on their complexity.

What Is Not Covered in a Storage Unit?

Your homeowners insurance policy probably doesn’t cover everything in a storage unit. Here are some common exceptions.

Common Excluded Perils

Home insurance may exclude certain perils that can destroy whatever belongings you have in a storage unit. For instance, mold and mildew due to poor ventilation are often not covered under standard homeowners or renters insurance policies.

Other commonly excluded perils include flood or earthquake damage, damage from pests, and theft without forced entry.

Business Inventory or Property

Most homeowners insurance policies will not cover business inventory or equipment that is stored for sale or distribution within a storage unit. If you’re keeping items for a business in a storage unit, consider getting a separate business insurance policy or a business property endorsement.

High-Value Items Beyond Their Special Limits

If you are storing high-value items like art, jewelry, collectibles, or antiques in a unit, you may want to add scheduled personal property coverage to your homeowners insurance policy. This will cover the full value of your belongings without a deductible. However, note that you will likely need to get appraisals for any items you want insured.

Understanding Your Storage Unit Coverage Limits and Deductibles

Before filing a claim, it’s important to understand your storage unit coverage limits and deductibles.

The Off-Premises Coverage Sublimit

Most homeowners insurance policies have an off-premise coverage sublimit. This is the maximum amount the insurance company will pay for a specific type of loss. Off-premises coverage for valuables in a storage unit is usually limited to 10% of your personal property coverage.

Special Sublimits for Valuables

Oftentimes, homeowners insurance policies have special sublimits for certain high-value items. These sublimits cap the amount of money your insurance company will pay for a loss of those items, regardless of their actual value or your overall personal property coverage.

How Your Deductible Affects a Storage Unit Claim

A deductible is the amount that you pay towards a covered loss before your insurance company kicks in. Choosing a higher deductible may lower your premiums. However, you could end up paying more in upfront costs if you file a claim.

Recommended: Homeowners Insurance Costs Explained

The Takeaway

Does homeowners insurance cover storage units? Generally speaking, it does. Most policies will provide off-premise coverage for your personal property, which includes storage units. However, you may only be able to claim a percentage of your personal property coverage amount. Review your policy to make sure you have the right amount of protection in place.

If you’re a new homebuyer, SoFi Protect can help you look into your insurance options. SoFi and Lemonade offer homeowners insurance that requires no brokers and no paperwork. Secure the coverage that works best for you and your home.

FAQ

How much are my belongings in storage covered for?

Belongings in storage are usually covered for a percentage of your personal property coverage, often around 10%.

Do I need to buy the insurance offered by the storage facility?

It depends. If you already have homeowners or renters insurance, your policy may already provide off-premise coverage for your personal property. You could also purchase a separate storage unit insurance policy from an independent insurer. If neither of those options work for you, you may decide to buy insurance from the storage facility.

Are my items covered against all types of water damage in storage?

Items in storage units are probably not covered against all types of water damage. Water damage for events like mold, flooding, or water damage due to poor maintenance are often not covered under standard homeowners or renters insurance policies. If you want to protect yourself against all types of water damage, you can purchase additional coverage.

Does my home insurance deductible apply to a claim for items in storage?

Your homeowners insurance deductible usually applies to a claim for items in storage under off-premises personal property coverage.

What should I do before putting valuable items into storage?

Before putting your valuable items into a storage unit, you should clean and dry all items properly and thoroughly. Dirt can contribute to the breakdown of certain materials over time, and not properly cleaning and drying items can lead to mold or mildew. It’s also a good idea to carefully wrap delicate items and cover furniture.

photo credit: iStock/imaginima
Auto Insurance: Must have a valid driver’s license. Not available in all states.
Home and Renters Insurance: Insurance not available in all states.
Experian is a registered trademark of Experian.
SoFi Insurance Agency, LLC. (“”SoFi””) is compensated by Experian for each customer who purchases a policy through the SoFi-Experian partnership.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SOPRO-Q325-019

A health maintenance organization, or HMO, is a type of health insurance plan that typically offers lower premiums and out-of-pocket costs in exchange for members using the plan’s network of providers.

That network is usually confined to a certain city or geographic area.

An HMO can be a good choice for healthy people who don’t anticipate needing a lot of specialized care in the coming year.

However, these plans tend to offer less flexibility in where you can go for care than other types of health plans, such as preferred provider organizations (PPOs).

Read on to learn if an HMO could be the right plan for you and your family.

How Do HMOs Work?

HMOs contract with a group of doctors, hospitals, and other healthcare providers within a certain area for a negotiated fee.

In return for accepting lower payments, HMOs offer providers a steady stream of patients. Insurers can then pass the savings onto patients in the form of lower premiums and out-of-pocket costs.

To take advantage of these lower costs, HMO members must, for the most part, receive care only from network providers.

This starts with your primary care physician (PCP). HMO members typically should choose a PCP from the plan’s network. Your PCP takes care of annual check-ups and other medical needs that require an office visit.

In an HMO, your PCP is typically also the gatekeeper for your other health needs. To see a specialist, such as a podiatrist or a dermatologist, you would likely need to first visit your PCP to get a referral to a specialist within the network.

There are often some exceptions to network-only care, however. Emergency care received out-of-network is usually covered. And, with some preventive care services, such as mammograms and gynecological visits, you may be able to see a network doctor without first getting a referral.

In cases where you may have a serious health condition requiring a specialist not included in the network, the HMO may cover that treatment as long as you request pre-approval.

In addition to low premiums, there are often low or no deductibles with an HMO. Instead, the plan will typically charge a copayment, or copay, for each clinical visit, test, or prescription.

How Do HMOs Compare With Other Types of Health Insurance?

Another commonly available health plan offered by employers and health insurance companies is a preferred provider organization, or PPO. These plans have many features in common with HMOs, but also a few key differences.

As with an HMO, members of a PPO plan have access to a network of providers. When they use providers within that network, they will typically pay less out-of-pocket costs, such as copays.

Unlike an HMO, however, care outside of the network is usually also covered, but at an additional cost.

How much the PPO will pay for an out-of-network doctor may be capped at what the PPO deems the “customary and usual” payments for providers in your area. Depending on where you live, that could mean a small or potentially large additional out-of-pocket cost.

Depending on where you live, that could mean a small or potentially large additional out-of-pocket cost.

Another key difference between these two types of plans: With a PPO, you typically do not need a referral to see a specialist, either within or outside of the network.

In addition, PPO plans usually have deductibles, while some HMOs do not. PPO plans also typically have more expensive premiums than HMOs.

However, not having to see your PCP (and pay a copay) to get a referral to a specialist can be a cost saver for members of PPOs.

Recommended: What Is a PPO Plan?

The Pros and Cons of HMOs

It can be a good idea to weigh the advantages and disadvantages of HMOs before you choose a plan, just as you would with any other type of insurance coverage.

Here are some of the most common pros and cons.

Advantages of HMOs

•   Lower costs. Premiums, deductibles, and copays are usually lower with an HMO compared to other types of health care plans. Some plans even have no deductible. Your out-of-pocket costs will also likely be lower for your prescriptions.
•   Less paperwork. Because your care is managed through your PCP and you are receiving care through the HMO network, billing tends to be less complicated for those with an HMO.
•   Care is often high quality. Because preventive services are generally fully covered and because your PCP can act as your advocate for early intervention medical care, many people find HMOs provide good quality of health care.

Disadvantages of HMOs

•   Provider restrictions. With an HMO, you must choose a primary care physician from the plan’s network. This doctor will manage your care and refer you to specialists within the network. If your current doctor is not in the HMO network, you would likely need to switch.
•   Restricted emergency care. Emergency care is usually covered even if it is received from out-of-network providers. But HMOs often have strict rules on what constitutes an emergency and which emergency providers will be covered.
•   Geographic restrictions. Because HMO networks are usually located within one geographic area, your network of providers will only be available within that location. That means if you’re traveling and you need medical care, those bills may not be covered, unless it is an emergency. Also, dependent college children who attend school out of state are usually not covered.

Recommended: Choosing an Individual Health Insurance Plan

The Takeaway

HMO plans can be an efficient, low-cost way to manage your health care needs. These plans can foster a close relationship with your primary care physician, who can help you navigate both preventive and specialty care.

Some consumers feel the restrictions on receiving care from out-of-network providers and the hassles of getting a referral can be an obstacle to optimal care.

HMOs are often compared to PPOs, which generally allow members more freedom to see out-of-network providers (though going out of network may cost more). PPOs typically don’t require referrals to see specialists.

To determine which type of health plan is best for you, you’ll likely want to weigh the costs and plan offerings against your budget and health needs. Before choosing a plan, it might also be helpful to track your spending for a few months to see how much you are currently spending on medical care.

When the unexpected happens, it’s good to know you have a plan to protect your loved ones and your finances. SoFi has teamed up with some of the best insurance companies in the industry to provide members with fast, easy, and reliable insurance.

FAQ

What are some downsides of having an HMO?

One drawback of having an HMO is that you’ll likely need to get a referral before seeking specialized care. Also, you generally can only see doctors within your plan’s network.

What does an HMO not cover

Coverage varies by insurer and plan, but in general, HMOs do not cover care from out-of-network providers, except in emergency situations.

Are HMO plans cheaper than PPO plans?

Generally speaking, yes. HMO plans tend to have lower monthly premiums and lower out-of-pocket costs than PPO plans.

Auto Insurance: Must have a valid driver’s license. Not available in all states.
Home and Renters Insurance: Insurance not available in all states.
Experian is a registered trademark of Experian.
SoFi Insurance Agency, LLC. (“”SoFi””) is compensated by Experian for each customer who purchases a policy through the SoFi-Experian partnership.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

A preferred provider organization (PPO) is a type of health care plan that offers lower out-of-pocket costs to members who use doctors and other providers who are part of the plan’s network.

These preferred providers have signed onto the network at a lower negotiated rate than they might charge outside of the network.

PPOs also offer members the flexibility to see providers outside of the plan’s network, although they will most likely pay more in out-of-pocket costs to do so.

To learn more about PPOs, and how this type of plan compares to other health insurance options, read on.

How Does PPO Insurance Work?

When you join a PPO health plan, you’re joining a managed care network that includes primary care doctors, specialists, hospitals, labs, and other healthcare professionals. PPO networks tend to be large and geographically diverse.

If you see a preferred provider, you will likely pay a copay, or you might be responsible for a coinsurance payment (after you meet the health care plan’s deductible).

While you are free to see any health care provider whether or not they are in the PPO network, if you see a provider outside of the network, you may pay significantly more in out-of-pocket costs. In return for flexibility, large networks, and low in-network cost sharing, PPO plans typically charge higher premiums than many other types of plans.

PPOs are a common, and often a popular, choice for employer-sponsored health insurance.

Recommended: Common Health Insurance Terms & Definitions

What Are the Costs of Going Out of the PPO’s Network?

If you see a provider who is not part of the plan’s network, you will likely be expected to bear more of the cost. PPOs typically use what’s called a “usual, customary, and reasonable” (UCR) fee schedule for out-of-network services.

Insurers calculate UCR fees based on what doctors in the area are charging for the same service you were provided.

If your doctor charges more than what your insurance company determines to be usual, customary, and reasonable, you most likely will be charged for the difference between the amount charged for the service and the amount covered by your insurer.

Depending on where you live and the service you received, this difference could be significant. It may also come as a surprise to policyholders who assume their medical costs will be covered and don’t fully understand the distinction between in-network and out-of-network providers.

A good way to avoid surprise charges with a PPO (or any health plan) is to talk to your provider and your insurer before you receive treatment about the total cost and what will be covered.

How PPOs Compare to Other Types of Health Care Plans

PPO plans are most often compared with health maintenance organizations (HMOs), another common type of managed care health plan.

HMOs typically offer lower premiums and out-of-pocket costs than PPOs in exchange for less flexibility.

Unlike a PPO, HMO members typically must choose a primary care physician from the plan’s network of providers. Care from providers out of the HMO network is generally not covered, except in the case of an emergency.

Also unlike a PPO, an HMO’s network of providers is usually confined to a specific local geographic area.

Another key difference between these two types of plans: HMO members typically must first see their primary care doctor to get a referral to a specialist. With PPOs, referrals are not usually required.

PPOs are also often compared to point of service (POS) plans.

POS plans are generally a cross between an HMO and a PPO. As with a PPO, POS members typically pay less for care from network providers, but may also go out of network if they desire (and potentially pay more).

Like an HMO, POS plans require a referral from your primary care doctor to see a specialist.

PPOs (as well as HMOs and POS plans) are very different from high deductible health plans, or HDHPs.

HDHPs charge a high deductible (what you would have to pay for health care costs before insurance coverage kicks in).

This means that you would need to pay for all of your doctor visits and other medical services out of pocket until you meet this high deductible. In return for higher deductibles, these plans usually charge lower premiums than other insurance plans.

You can combine a HDHP with a tax-advantaged health savings account (HSA). Money saved in an HSA can be used to pay for qualified medical expenses.

HDHPs are generally best for relatively healthy people who don’t see doctors frequently or anticipate high medical costs for the coming year.

Recommended: Beginner’s Guide to Health Insurance

What Are the Pros and Cons of PPO Insurance?

As with all health insurance options, PPOs have both advantages and disadvantages. Here are a few to consider.

Advantages of PPOs

•   Flexibility. PPO members typically do not have to see a primary care physician for referrals to other health care providers, and they may see any doctor they choose (though they may pay more for out-of-network providers).

•   Lower costs for in-network care. Out-of-pocket costs, such as copays and coinsurance, for care from in-network providers can be lower than some other types of plans.

•   Large provider networks. PPOs usually include a large number of doctors, specialists, hospitals, labs, and other providers in their networks, spanning across cities and states. As a result, network coverage while traveling or for college student dependents can be easier to access than with more restricted plans.

Disadvantages of PPOs

•   High premiums. In return for flexibility, PPO members can expect to pay higher monthly premiums than they may find with other types of plans.

•   High out-of-pocket costs for out-of-network care. Depending on where you live, the treatment you receive, and how your insurer calculates “usual, customary, and reasonable” fees, you may find you are responsible for a large portion of the bill when you receive care outside of the PPOs network.

•   Might be more insurance than you need. If you rarely see doctors and wouldn’t mind potentially switching doctors, you may be able to save money by going with an HMO or a HDHP.

The Takeaway

PPOs are a popular type of health plan because of the flexibility, ease of use, and wide range of provider choices they offer. PPO networks tend to be large and varied enough to include a patient’s existing doctors. If not, members still have the option of going out-of-network and receiving at least some coverage from a PPO. PPO members pay for this flexibility, however.

PPOs typically come with higher premiums, along with extra costs associated with out-of-network care. That can be prohibitive for many consumers.

Your employer’s benefits department or an experienced insurance agent or broker can help you compare PPOs to other types of health care plans and determine which choice is right for your health care needs and your budget.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

FAQ

What is a disadvantage of having an HMO?

One drawback of PPO plans is that they’re often more expensive than HMO plans. Monthly premiums are usually higher, and you’ll likely have to pay more out of pocket if you see doctors who are out of the plan’s network.

What does PPO mean?

PPO stands for preferred provider organization. It’s a type of health care plan that offers lower out-of-pocket costs to members who see health care providers who are part of the PPO plan’s network.

Is having a PPO worth it?

It depends. PPOs tend to have large networks, which can make them a good choice for someone who travels frequently within the U.S. or lives in two different states.

Auto Insurance: Must have a valid driver’s license. Not available in all states.
Home and Renters Insurance: Insurance not available in all states.
Experian is a registered trademark of Experian.
SoFi Insurance Agency, LLC. (“”SoFi””) is compensated by Experian for each customer who purchases a policy through the SoFi-Experian partnership.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SOPRO-Q325-013

Buying insurance coverage helps keep you protected from the full financial fallout of an accident or injury. But even with insurance, you’ll probably still be responsible for some costs when you file a claim.

An insurance deductible is the amount of money the insured party is responsible for at the time of loss or damage: it’s the cost you have to pay before the insurance company pays out its share.

Here’s what you need to know about the different types of insurance deductibles and other insurance-related costs you may face.

What Is a Deductible?

When you buy insurance, you’ll encounter several different costs depending on the type of coverage you’re purchasing. These may include monthly premiums, copays, out-of-pocket maximums, and possibly others.

The vast majority of insurance policies, whether they’re auto, health, or homeowners, carry a deductible. So what is a deductible, and how does it work?

The deductible is a sum of money you, as the insured party, are expected to pay toward a loss. Another way to think about it: It’s the amount the insurance company deducts from the total claim and asks you to pay.

For instance, say you get into a car accident in which you sustain $8,000 worth of damage and you have a $1,000 deductible. When you file your claim, you’ll pay $1,000 toward repairs, and the insurance company will cover the remaining $7,000 (or up to whatever limits are laid out in your insurance contract).

Your deductible can be a fixed dollar amount or a percentage, depending on your individual plan and the kind of insurance policy you’re talking about. Homeowners insurance, for instance, is commonly offered with deductibles calculated as a percentage of the property’s total insured value.

It’s important to understand that your deductible is separate from your premium, which is the amount of money you pay each month in order to keep your insurance policy active.

Also remember that you may also be responsible for other insurance-related expenses, like copays or coinsurance, so always read the fine print carefully.

Copay vs Deductible

With certain types of insurance — primarily health insurance products — you may be required to pay a copay each time you go to the doctor’s office or receive a covered service. This copay is separate from your deductible, and, generally, your copay doesn’t count toward your deductible amount.

As with other types of insurance, the health insurance deductible must be paid by the insured person before the insurance company begins its coverage. However, individual health plans may cover certain services, such as regular check-ups, even before the deductible is paid in full.

Here’s an example: Say you twist your ankle and visit your doctor, who orders an MRI. If your copay is $25, you’ll pay $25 at the office before or after you see your physician. If the total cost of the doctor’s care and imaging services is $1,000 and you have a $500 deductible, you may still be responsible for the full $500. Any copays you’ve paid along the way won’t be subtracted from your deductible.

Some plans may carry a coinsurance cost rather than a copay. The two are similar, but not identical. Coinsurance is an amount you pay when you receive a medical service, separate from your deductible. Unlike copays, which are charged at a fixed dollar amount, coinsurance is calculated as a percentage of the total cost of the service. Your plan might even include both copays and coinsurance.

All insurance policies are different, and your individual costs and experience may vary depending on the services you’ve received and the specific coverage you have. You can consult your insurance paperwork or contact your insurer for full details on what’s covered in your plan.

Out-of-Pocket Maximums

Health insurance policies in particular are subject to federally mandated out-of-pocket maximums. This is the highest total dollar amount you’ll have to pay toward covered healthcare over the course of a single year, including both deductibles and copays.

The out-of-pocket maximum does not include the amount you pay toward your monthly premium, however. Nor does it include out-of-network services or services that your plan expressly does not cover.

For 2025, the out-of-pocket maximum for a Marketplace plan can’t be more than $9,200 for an individual or $18,400 for a family. In 2026, that limit rises to $10,600 for an individual or $21,200 for a family. (The maximum is allowed to be lower, however, so consult your plan paperwork for full details.)

Do You Want a High or Low Deductible?

When shopping for insurance coverage, you’ll likely have a range of options to consider, including varying deductible costs. And when it comes to figuring out whether you want a high or low deductible, the answer is: It depends.

Generally speaking, the lower your deductible, the higher your premium will be and vice versa. This makes sense when you think about it. If you have a low deductible, the insurer will have to pay out a higher amount when you incur a loss. So in exchange for the promise of covering most of the costs when a claim is filed, the company expects you to pay more up front in the form of a higher premium.

While choosing a higher deductible can help you save money over time since your monthly premiums will be lower, it also means you’re assuming more risk. If something happens and costs are incurred, you’ll be responsible for a larger share of those expenses.

On the other hand, choosing a lower deductible means you’ll likely pay a higher premium each month. But you’ll also have less to worry about if you do need to file a claim, since the insurance company will cover more of the costs (assuming that all the damages and expenses are covered under your policy).

As with so many other financial matters, what’s right for you comes down to a number of factors, including your risk tolerance, budget, and even your lifestyle. If you participate in extreme sports, for instance, and are at risk for catastrophic injuries, you might want to pick a health insurance policy with a lower deductible and higher premiums.

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Zero-Deductible Insurance: Is It a Thing?

You may see ads for zero-deductible insurance policies and wonder if they’re too good to be true. While zero-deductible insurance policies do exist, they usually carry higher premiums than policies with deductibles, and you may also be responsible for a one-time no-deductible fee or waiver.

Furthermore, some insurance coverages are required by state law to carry a minimum deductible, particularly when it comes to auto insurance.

Before you sign up for any kind of insurance coverage, be sure to read the contract thoroughly to ensure you understand what costs you’re responsible for.

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Types of Deductibles

There are many different types of insurance policies with deductibles on the market. Common ones include:

•   Health insurance deductibles

•   Auto insurance deductibles

•   Homeowners insurance deductibles

•   Renters insurance deductibles

•   Life insurance deductibles

The deductible amount varies by type of insurance, company, and plan, among other factors.

The Takeaway

Purchasing insurance is an important — and sometimes legally mandated — step toward protecting yourself from the high costs of personal accidents, property damages, and medical bills. But most policies involve set costs, including deductibles. This is the portion of the claim the insured party is responsible for paying.

Whether you’re comparison shopping or switching from your current plan, it’s important to understand what your deductible will be. Having a full picture of all the costs involved can help you find coverage that fits your life and finances.

When the unexpected happens, it’s good to know you have a plan to protect your loved ones and your finances. SoFi has teamed up with some of the best insurance companies in the industry to provide members with fast, easy, and reliable insurance.

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