Home insurance is a hot topic right now, as many Americans grapple with soaring premiums. Worse, some homeowners in parts of Florida and California are struggling to get any coverage at all.

One frequent piece of advice when it comes to lowering your homeowners insurance premium or getting an insurer to take you on is to raise your deductible. But that can be costly if (or when) you actually have to make a claim. Read on to learn some of the pros and cons of a high deductible.

How homeowners insurance deductibles work

A homeowners insurance deductible is the amount you pay before the insurer's money kicks in. Here's how that might look if you make a $5,000 claim:

• If you have a $500 deductible, you'd pay the first $500 and the insurer would pay $4,500.
• If you have a $2,500 deductible, you'd pay $2,500 and the insurer would pay the remaining $2,500.

Deductibles often work as a fixed dollar amount, but they may also be calculated as a percentage or a mixture of the two. The key thing is that the higher your deductible, the lower your premium will be. According to analysis by Insurance.com, on average, you could reduce your premium by around $500 by a year if you increase your deductible from $500 to $2,500.

Let's say you pay $2,000 a year in homeowners insurance. Figures vary by state and property, but that reduction could shrink your payment to $1,500. It's a significant savings. Just be aware that if you needed to file a claim, you'd be on the hook for $2,500 of costs instead of $500.

Not only would you need to have that money tucked away somewhere, but if you had to make several claims, any savings would be wiped out. That said, if you had to make several claims, your premium would likely increase and there's even a risk your insurer would not renew your policy.

How a high deductible can save you money

In really simple terms, if your annual savings add up to more than the extra deductible over time, you'd be ahead financially. So, let's say you could swing the $500 annual discount above by increasing your deductible by $2,000. It would take four years before the savings covered the potential extra cost. After that, every year that passed without a claim would be a gain for you.

Premiums will no doubt continue to rise in that time, but you'd still pay less with a higher deductible. If you went six years without filing a claim, you could have saved $3,000. Given that Square State Insurance says households claim once every 10 years on average, the odds are in your favor. It could mean you'd save $5,000 in annual payments over a decade, and potentially only spend your deductible of $2,500 once.

But what happens if you need to claim and you don't have enough cash? In an ideal world, you'd have enough savings to cover your deductible before you lowered your rate. Or you'd have been able to sock the cash you save by paying a lower rate into a high-yield savings account and build up a house emergency fund.

Sadly, we live in the real world, and disaster might strike when we are not ready. If you increased your deductible because you couldn't afford your homeowners insurance, you might not be able to put extra money aside over time. Or perhaps you plan to save up for an emergency, but then something goes wrong immediately after you've increased your deductible.

In that situation, you may have to take on debt to cover the cost, which could wipe out any savings. Let's say you put $2,000 onto a credit card because you needed the money quickly. At the moment the average interest rate on a credit card is over 20%. If you paid it down at $100 a month, it would take over two years and you'd pay almost $500 in interest.

Does raising your home insurance deductible make sense?

There's no one-size-fits-all deductible. Raising your deductible can significantly reduce your annual homeowners insurance premium. But it also means you need to have more emergency cash on hand in case something goes wrong.

Take these steps before you increase your deductible:

• Make sure you have enough money to cover the larger deductible: You might even have to pay a higher premium while you build up some savings. It's stressful enough when things go wrong in your home without having to worry about how you'll pay your part of the repairs.
• Crunch the numbers to see how much you'd actually save: We looked at average figures above, but every situation is different. For example, there's no point in increasing your deductible to $2,500 if you'll only save $100 a year.
• Think about how often you might actually file claims: Many homeowners are reluctant to file claims because it will increase their premiums. If that's the case for you, it strengthens the case for a higher deductible.

Bear in mind that increasing your deductible is just one way to cut your home insurance costs. Others include rate shopping with top homeowners insurance companies to get the best deal. You may also be able to bundle your home and auto insurance. Plus, there may be some relatively low-cost home improvements -- such as adding a security system -- that could cut your premiums as well.

Our picks for best homeowners insurance companies

There are many homeowners insurance companies to choose from. We’ve researched dozens of options and short-listed our favorites here. Looking for a green build discount or easy bundle policies? Want an easy-to-use interface? Read our free expert review and get a quote today.