Altering your deductible is the quickest way to adjust your insurance costs. However, this comes with some challenges. So when it comes to saving money on your car, health or homeowners insurance policies, it’s worth discussing and giving some careful consideration. Here are a few things to consider…
Deductible Math 101
Raising your deductible from say $500 to $1000 may only save $50 – $100 per year, which would take years to recoup in savings. But if you had an accident you’d be out $1000 instantly. If you are good with your money and a safe driver, this is an effective strategy. But if you have had a few accidents and money is tight, the lower deductible may pay out.
Your age also factors into the equation. If you are a mature 50-year-old driver with a clean driving record, you might only save $20 to $30 per year on your auto insurance premiums by raising your deductible from $250 to $500. But if you are a younger driver, you might be able to save as much as $250 or $300.
The differences in premiums when you raise the deductible for a home insurance policy are relatively small. You’d save around $85 per year by switching from a $200 to a $500 deductible and save around $80 annually by switching from a $500 to a $1,000 deductible.
Health insurance deductibles can get complicated for families. The best way to establish the ideal deductible is to review your family’s typical health costs, then discuss these with your insurance provider to identify the best scenario.
It’s up to you
Deductibles are largely a matter of preference. Some like them high. Some like them low. For those who manage their money well and have a little cushion in their savings account, higher deductibles will often save you money in the long run.
To learn more about adjusting your deductible, contact your independent Provident Insurance agent. We serve Plainfield, Greenwood, Avon, Brownsburg, Indianapolis, Carmel, Zionsville and the entire central Indiana area. Stop in one of our convenient locations to discuss your insurance needs today.