Should you adjust your deductible?

Written by
March 6th, 2012

The insurance deductible is the portion of the bill for which you’re responsible in the event of a covered loss, such as an accident or a theft. Your insurance company deducts the amount from the settlement you receive, which explains its name.

Two factors will determine whether you should adjust your deductible: your finances and your driving habits.

  1. Finances:  Review your budget to make sure you could pay the deductible in the event of an accident.
  2. Driving Habits: If you have a reoccurring history of having accidents, the more likely you are to have another; therefore, it makes sense to keep a lower deductible.

The higher you set your insurance deductible, the lower your premiums will be. Another factor in favor of a higher deductible is that having to pay a deductible is not a certainty because you may not ever have an accident or other claim. On the other hand, premiums are an absolute certainty – you have to pay your premiums in order to maintain coverage so, it may make sense to take more of a financial risk with your deductible.

We looked at 3 of our carriers – to give you an idea of the savings by carrying a higher deductible amount. Please be aware that these figures are based upon an average home in Waukesha county with 3 cars on an annual basis.

Annual Homeowners Premium       
Deductible $250 $500 $1,000
Carrier A $931 $850 $801
Carrier B  $956 $869 $787
Carrier C $867 $807 $742

On average we found that increasing a deductible from $250 to $500 saved up to 10%. Increasing a deductible from $250 to $1000 saved between 14% and 18% off of your annual homeowner’s premium.
       
Annual Auto Premium       
Deductible $250 $500 $1,000
Carrier A $2,767 $2,547 $2,391
Carrier B $2,653 $2,508 $2,336
Carrier C $2,777 $2,522 $2,219

On average we found that increasing a deductible from $250 to $500 saved up to 10%. Increasing a deductible from $250 to $1000 saved between 14% and 21% off of your annual auto insurance premium.

Wisconsin residents, for more information on saving money on your auto & home insurance, contact a knowledgebroker.

 

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