Should you take a higher deductible to save money?

Yes. Yes. Yes. (well almost always) Some people think that higher deductibles are just another way for insurance companies to avoid paying claims. But because of the way rates are calculated, the customer really benefits more in the long run.

Insurance companies set their rates so that they should make a small profit regardless of which option you choose.  So if a $250 deductible policy costs $100 more than a $1,000 deductible policy, you can be sure that the insurance company expects to pay out only $60 or $70 more on average in claims (the balance going to company expenses, agent commissions, and profit).

Another reason to take a higher deductible is to resist the temptation to turn in little nuisance claims.  All insurance companies take the number of claims into account when reviewing your policies, either directly in determining the premium, or indirectly when deciding whether to renew coverage.  Most insurance companies consider an account with several small claims to be less desirable than an account with a single more substantial claim.

Who wouldn’t want to take a higher deductible? If you would have trouble sleeping at night or just couldn’t afford $1,000 if you had a claim, then pay the extra premium for peace of mind.

(Note: in Western New York, “high” means taking a $1,000 deductible instead of the standard $250; in some parts of the country, deductibles of $2,500 or $5,000 may be practical)

For more information, drop by our website at, or get in touch with me.

The information in this post is general in nature, and geared toward insurance conditions in Western New York.  As always, you should speak with an insurance adviser to determine your specific insurance needs.

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