What a deductible actually costs you
The number that decides whether a covered claim is manageable or a crisis.
A deductible is the amount you pay toward a covered loss before the insurer pays anything. Raise it and the premium falls; lower it and the premium rises.
That trade is well understood. What's less understood is that the right deductible is set by your bank balance, not by the arithmetic.
You probably have more than one
People talk about "my deductible" as if a policy has one. Most carry several, applying to different things.
- Auto: separate deductibles for collision and comprehensive, often different amounts
- Glass damage: frequently a reduced deductible, sometimes waived for repair
- Home: often a percentage of the dwelling value rather than a flat sum
- Wind, hail, or hurricane: commonly a separate and higher deductible
- Pet: annual, or per condition — a significant difference
The percentage deductible catches people out
A flat deductible is a number you can picture. A percentage deductible on a home policy scales with the insured value, and on a substantial property it can be far larger than the flat figure people assume they have.
If your policy uses a percentage, work out the actual dollar amount now rather than at claim time.
The test that matters
Not "what's the break-even?" but "could I pay this tomorrow, without borrowing and without touching money earmarked for something else?"
A deductible you can't cover converts a covered claim into a crisis — the precise outcome insurance was bought to prevent. If you raise it, move the premium saving into savings rather than absorbing it into spending.
When it doesn't apply
Liability claims generally carry no deductible, since they pay third parties rather than you. And where another party is at fault and their insurer accepts liability, you may avoid yours or be reimbursed once fault settles.
Common questions
It always lowers the premium. Whether it saves money depends on whether you claim, and on whether you could actually pay it — an unaffordable deductible is a false saving.
Often you pay it initially and are reimbursed once liability is settled, or you claim against their insurer directly and avoid it. It depends on the situation and your policy.
One calculated as a share of the insured value rather than a flat sum, common on home policies for wind and hail. Work out the dollar figure — it's usually larger than people expect.
Want this priced for your situation?
This page is general information, not advice about your specific circumstances. A licensed insurance professional can tell you what’s actually available to you.
General information only, not insurance advice. Coverage, availability, and terms vary by insurer and by state, and are subject to underwriting. Quote My Policy LLC is a licensed insurance producer. Nothing here binds coverage.