It seems a lot of online literature attempts to use one's ability to pay a deductible as the determining factor for which deductible to choose in auto insurance -- "if you don't have enough in savings to cover a $1,000 deductible, you should choose a lower deductible". But what about those who have more than enough money in an emergency fund to cover a $10,000+ deductible? Should they choose the highest deductible? I believe the answer is most likely no. One should compare his/her situation to find the right balance.
Here is a table for my collision insurance on a ~$25k car:
| Deductible | 6 Month Premium |
|---|---|
| $100 | $505 |
| $250 | $420 |
| $500 | $355 |
| $750 | $315 |
| $1,000 | $280 |
| $2,000 | $240 |
| $2,500 | $230 |
Comparing the $2,500 and $1,000 column shows a 6 month premium difference of $50, or $100 per year. This (basically*) means I would have to go 25 years without a claim for the monthly savings of the $2,500 deductible to be the right decision. Choosing a deductible is a little trickier when deciding between $250, $500, and $750... but my point is: make sure you consider this kind of break-even analysis when selecting a deductible.
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Hopefully this is helpful -- definitely let me know if you disagree!
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*=this is assuming the claim is >=$2,500
Submitted January 09, 2017 at 04:59AM by aaron181818 http://ift.tt/2iZ4uIK
