Choosing The Right Insurance Deductible

Jan 19, 2021 | Car Insurance, General, Homeowners Insurance

The most common thing people remember about their insurance policy is the deductible. Makes sense… It’s your out-of-pocket expense if you need to use your policy. The lower the better, right? Well, not always.

WHAT DO MOST PEOPLE HAVE?

When helping a customer select a deductible, I often get asked “what do most people have?” It’s a question I’m not very fond of, because when you think about it, we’re talking about you and what you feel comfortable with, not what your neighbor feels comfortable with. Maybe your next door neighbor is in a much different financial situation than you and so they carry a $10,000 deductible. That doesn’t mean you should do the same, does it? It’s important to pick the deductible you feel comfortable with, whether is matches “the norm” or not.

HOW TO CHOOSE YOUR INSURANCE DEDUCTIBLE

The best way to choose your deductible is to think of how much money you could easily part with, on a whim, without having a significant impact on your life. If that number is $1,000, choose that for your deductible. If the number is $750, $500, or $250, there’s your answer. The higher the deductible, the cheaper the cost of the insurance because the insurance company has less on the line. For this reason, it’s common to pick the highest deductible you feel comfortable with in order to get a lower premium.

SHOULD I HAVE THE SAME INSURANCE DEDUCTIBLE FOR MY HOME AS MY CARS?

Probably. If you’re comfortable paying $1,000 on a whim if something happens to your home, why wouldn’t you be comfortable paying that same $1,000 if something happened to your car instead? I see people with different deductibles for different policies all the time and there is usually not a good reason for it. There’s nothing saying you can’t do it but it’s usually illogical in my opinion.

For more information on choosing your deductible or any other insurance topic, please reach out to me at www.lofrumentoagency.com/contact-us/.

John Lofrumento auto insurance Clifton park, nyJohn Lofrumento, CFP®, FSCP®, RICP®
President, The Lofrumento Agency
Clifton Park, NY / Ballston Lake, NY

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