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Higher deductible lower premium or lower deductible higher premium?

July 22, 2014 by Chris Whitmire · Leave a Comment

We all have to pay our insurance bill every month – it’s certainly not the most pleasant bill to pay, but we can all agree it’s necessary.

What makes paying this particular bill more unpleasant than any other bill we pay is that our insurance bill consists of money we pay out that we do not see a direct and immediate benefit from.  Other goods and/or services we routinely pay for such as our groceries, electricity, mortgage or rent, we get a direct and immediate benefit from.

Deductible AnalysisWe all know that the best way to keep our insurance costs down is to have as few claims as possible for as long as possible.  Another simple way to lower your insurance bill is to raise your deductible.  As an insurance agent this is a conversation I inevitably have with all of my clients at some point in time.  So, the question is: higher deductible and lower premium, or lower deductible higher premium?

The purpose of insurance is to ensure that you will be restored financially given an accident or catastrophic event.  Opting to save money on your insurance bill by raising your deductible assumes that you will be able to come up with the cash needed to cover the deductible (the amount you are ultimately responsible for) given such an event occurs.  Generally when an event happens that results in us having to pay our deductible, it’s never at a “convenient” time.

If you ultimately opt for a higher deductible it’s important to make sure that the money you are saving on your bill every month makes up for the larger amount of money you will have to come up with should an accident or catastrophic event occur.  Like most decisions in life, there are pros and cons to both options.  Talking to your insurance agent and having him or her run the numbers for you both ways will help you know if the deductible level you are paying for is the correct decision for your personal finances.

If you’d like to discuss these options further then don’t hesitate to contact me.

Author:  Chris Whitmire

 

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Filed Under: Commercial Insurance, General, News, Personal Insurance · Tagged: Accident, Deductible, Insurance Premiums, Personal Lines

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