Calculate whether raising your home or auto insurance deductible saves money in the long run. Shows annual premium savings, break-even period, and 10-year total cost comparison.
Annual Premium Change: New Annual Premium = Current Premium x (New Deductible Factor / Current Deductible Factor) Saving = Current Annual Premium - New Annual Premium Break-Even Period (months): Break-Even = (New Deductible - Current Deductible) / Annual Saving x 12 10-Year Net Cost: Option Cost = (Annual Premium x 10) + (Expected Claims x Deductible) Net Impact = Current Option Cost - New Option Cost
Raising your deductible typically lowers your premium but increases your out-of-pocket cost if you file a claim. The decision depends on how likely you are to file a claim and how many months of premium savings it takes to offset the higher deductible -- the break-even period.
According to the Insurance Information Institute, raising a home deductible from $500 to $1,000 typically saves 7-10% on your annual premium. Going from $500 to $5,000 can save up to 28%.
The break-even period is how many months of premium savings it takes to cover one extra deductible payment. If you raise your deductible by $500 and save $20/month, your break-even is 25 months. If you go claim-free that long, you come out ahead.
Deductibles and premiums have an inverse relationship: a higher deductible means the insurer pays less per claim, so your premium goes down. The relationship is not linear -- the savings are largest when going from very low to moderate deductibles.
Most financial advisors recommend choosing the highest deductible you could comfortably pay out of pocket without financial hardship. A common rule is to set your deductible equal to 1-3 months of savings.
Current premium and deductible. Enter your current annual premium and deductible so the calculator can model how changing the deductible shifts your premium and your risk.
Proposed deductible. Choose a higher or lower deductible to compare. A higher deductible lowers the premium but raises what you pay out of pocket at claim time.
The result shows the premium change against the extra out-of-pocket risk you take on. The key figure is the break-even: how many claim-free years the premium savings would take to offset the higher deductible if you had one claim. If you rarely file claims and could comfortably cover the higher deductible, raising it usually wins; if a large out-of-pocket hit would strain you, the lower deductible buys peace of mind.
This is an educational estimate, not a quote. The premium-to-deductible relationship varies by insurer and policy type, so your real savings may differ from the modeled figure. It does not account for claim frequency, policy-specific rules, or separate deductibles for perils like wind or hail. Confirm the actual numbers with your insurer.
Raising it makes sense if you rarely file claims and could comfortably pay the higher amount after a loss. The premium savings then outweigh the added risk over time.
It is how long the annual premium savings would take to equal the extra out-of-pocket cost of a higher deductible if you had one claim. A short break-even favors the higher deductible.
No. Home policies often have separate deductibles for perils like wind or hail, sometimes expressed as a percentage of the home's value rather than a flat amount.
Understand the concept in what is a deductible and how insurance deductibles work, then see it in context with reading a home insurance estimate. Compare full quotes with the home and auto calculators.
Premium reduction factors are derived from Insurance Information Institute published research on deductible-to-premium relationships, supplemented by state insurance department rate filings. The 10-year model uses actuarially expected claim frequencies for homeowners (approximately 1 per 9 years) and auto (approximately 1 per 5 years) as defaults, adjustable by the user.
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