How To Choose The Right Home and Auto Deductible #AskTheMoneyGuy

How To Choose The Right Home and Auto Deductible #AskTheMoneyGuy

[Victriol]

I am a P&C agent here in Florida and have a CIC Designation and in the business 20 years. What you are saying makes sense, and as an agent and an advisor to my clients, I try to push the higher deductibles ESPECIALLY on home insurance. I try to educate my clients not to put in small claims, because carriers will surcharge any claim. So in the long run, they will pay it back to the carrier and then some through the surcharges. Now one reason for a 500 deductible is the financial situation the person is in. If a claim is a 1000 dollars and that extra 500 dollars will financially hurt them, we stick with the 500.

I will never go with a PIP deductible when there is a family involved. I see dad and mom have a 1000 on the PIP and I ask them if they have kids. They say they have two. I ask, do you drive in the same car, they say yes. Well, if you are in an accident EACH of you have that deductible. So to save very few dollars, you now have 4000 in deductibles. You can change that in the policy, but never have I seen it changed. Even then, there is not that much cost savings on someone who has a preferred type of policy. In my 20 years, I can only think of one time I put that deductible on there. It was a single guy with several tickets.

On the home, I will push a flat hurricane deductible if available instead of the percentage. Main reason is with the policies dwelling increasing a little each year, that deductible also increases. In a few years, and as we know, no one looks at their policy, that deductible can go up another 500 to even higher. A flat will always remain the same.

So I agree with the higher deductibles, but it still comes down to someone's comfort in what they want to shell out for a claim. Also if there is really no cost difference, then go with the lower deductible, but use it wisely. I do not think a high deductible or low deductible is a right or wrong thing. I just try to see what is best for the client. Explain the advantages and disadvantages of two. Still over the years, people will take the lower deductibles. Now as rates continue to increase especially on the homeowner's side. Changing the 1000 to a 2500 is a great cost savings tool. In some cases, you can recoup that 1500 in only a few years. Then if rates continue to go up, the 1000 will be hit harder than the 2500.

Hopefully this helps. I am an insurance nerd I guess you can say. I am the one who reads policies for fun and loves talking insurance.

[tomj]

When I looked into lowering my deductibles I found that it barely lowered my premium at all, to the point of it taking almost 20 years to save the additional $500 deductible ($500 to $1, 000). Considering all aspects, I kept our deductible at $500 and while I certainly wouldn't file a claim for under $1, 000 (or even a little more), when I did have to on my wife's vehicle the $500 deductible was a lot easier to swallow. Throw in another $600 in increased premiums over the next few years and clearly you don't want to file for any small fender benders. Besides, with a few hours in the driveway and $30 worth of materials it's easy to get your car back to looking a lot better (95%). It may not always be perfect but you'll have to get within 6 ft to see anything.

[thuntermi]

Even if you don't get dropped, your premiums might increase if you make a claim. I had a home burglary where the total claim ended up being about $4, 000. My insurance premium with that company almost doubled over the next 2 years.

[UltimateTexasHoldemGuru]

Definitely shop around insurance companies as well.

[Sovnarkom]

You also have to consider what your lender will allow. I was required to have a $500 homeowner and $1000 auto liability coverage.

[RobotMowerTricks]

Wow that's a great thought. But can we do a calculation?

What I'm thinking is, if you need to keep your deductible in cash and not in the market, your deductible is how much will not make 10% per year in the market. So if you raise your deductible $1000, you better save $100 a year.