Raising Your Deductible – Weighing the Risks vs. the Benefits

Raising your deductible is one way to lower your insurance costs, but the risks vs. benefits of raising your deductibles may change your mind. Raise your deductible to save money immediately by reducing your annual premiums, but you may be stuck paying out of pocket for repairs after an accident if your deductible is too high. Read our guide below to determine if raising your deductible is worth it after weighing the risks vs. the benefits.

UPDATED: May 8, 2023

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UPDATED: May 8, 2023Fact Checked

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Chris Tepedino

Insurance Feature Writer

Chris Tepedino is a feature writer that has written extensively about home, life, and car insurance for numerous websites. He has a college degree in communication from the University of Tennessee and has experience reporting, researching investigative pieces, and crafting detailed, data-driven features. His works have been featured on CB Blog Nation, Flow Words, Healing Law, WIBW Kansas, and C...

Insurance Feature Writer

Laura Walker

Former Licensed Agent

Laura Walker graduated college with a BS in Criminal Justice with a minor in Political Science. She married her husband and began working in the family insurance business in 2005. She became a licensed agent and wrote P&C business focusing on personal lines insurance for 10 years. Laura serviced existing business and wrote new business. She now uses her insurance background to help educate...

Former Licensed Agent

UPDATED: May 8, 2023

Advertiser Disclosure

It’s all about you. We want to help you make the right coverage choices.

Advertiser Disclosure: We strive to help you make confident insurance decisions. Comparison shopping should be easy. We are not affiliated with any one insurance company and cannot guarantee quotes from any single insurance company.

Our insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different insurance companies please enter your ZIP code above to use the free quote tool. The more quotes you compare, the more chances to save.

Editorial Guidelines: We are a free online resource for anyone interested in learning more about insurance. Our goal is to be an objective, third-party resource for everything insurance related. We update our site regularly, and all content is reviewed by insurance experts.

UPDATED: May 8, 2023

Advertiser Disclosure

It’s all about you. We want to help you make the right coverage choices.

Advertiser Disclosure: We strive to help you make confident insurance decisions. Comparison shopping should be easy. We are not affiliated with any one insurance company and cannot guarantee quotes from any single insurance company.

Our insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different insurance companies please enter your ZIP code above to use the free quote tool. The more quotes you compare, the more chances to save.

UPDATED: May 8, 2023Fact Checked

One way to manage the cost of your premiums is to raise or lower your deductibles. Higher deductibles mean lower premiums. But there is a balance between saving money and putting yourself in financial jeopardy. Adjusting your deductibles according to your personal needs is a tool you can use to leverage your ability to buy insurance.

The important thing to keep in mind is that you must pay your deductible before the insurance will cover the rest of a claim. So if you set the deductible to a high amount, such as $1500, then you will have to pay that amount out of pocket before your insurance will do anything. It may sound tempting to set a high deductible in order to get lower premiums, but if you set them too high, your insurance will not be much help unless have the cash available to pay them.

On the other hand, if you have very little cash flow you can opt for having low deductibles or none at all. Your premiums will increase as the deductible goes down, but it may be more affordable to pay higher premiums than to have to allocate a portion of money to always be available in an emergency. Both higher and lower deductibles work for you, they just work for you in different ways.

Another thing to consider is the age of your vehicle. If you are driving a 10 year old sedan, the insurance company is not going to offer you a high cash value if the car is totaled, and many relatively minor damages could push the car’s value beyond the total limit. To save money and accomplish the same thing, set your deductibles high to reduce premiums and plan on replacing the vehicle with another older car if you get into an accident. Also, be sure to compare insurance quotes on a regular basis (at least every 6 months) to see if you can save by switching insurers.

Frequently Asked Questions

What is a deductible in car insurance?

A deductible is the amount of money that you agree to pay out of pocket before your insurance coverage kicks in.

How does raising your deductible affect your car insurance premium?

Raising your deductible typically lowers your car insurance premium because you are agreeing to assume more financial risk in the event of an accident. Insurance companies reward policyholders who are willing to assume more risk by charging them lower premiums.

What are the benefits of raising your deductible?

The main benefit of raising your deductible is that it can help to lower your car insurance premiums. By agreeing to pay a higher amount out of pocket in the event of an accident, you are telling your insurance company that you are a responsible driver who is less likely to file a claim. This can result in lower premiums and greater savings over time.

What are the risks of raising your deductible?

The biggest risk of raising your deductible is that you will have to pay more out of pocket in the event of an accident. If you don’t have enough savings to cover your deductible, you may find yourself in a difficult financial situation. Additionally, if you are in an accident that is not your fault and the other driver doesn’t have insurance, you may be responsible for paying your deductible even though you are not at fault.

How do you decide whether to raise your deductible?

You should consider your personal financial situation when deciding whether to raise your deductible. If you have enough savings to cover a higher deductible, it may be a good idea to raise it and enjoy the cost savings on your insurance premiums. However, if you don’t have enough savings or you are concerned about the financial risks of a higher deductible, you may want to keep your deductible at a lower level. Ultimately, the decision is up to you and should be based on your individual needs and circumstances.

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Chris Tepedino

Insurance Feature Writer

Chris Tepedino is a feature writer that has written extensively about home, life, and car insurance for numerous websites. He has a college degree in communication from the University of Tennessee and has experience reporting, researching investigative pieces, and crafting detailed, data-driven features. His works have been featured on CB Blog Nation, Flow Words, Healing Law, WIBW Kansas, and C...

Insurance Feature Writer

Laura Walker

Former Licensed Agent

Laura Walker graduated college with a BS in Criminal Justice with a minor in Political Science. She married her husband and began working in the family insurance business in 2005. She became a licensed agent and wrote P&C business focusing on personal lines insurance for 10 years. Laura serviced existing business and wrote new business. She now uses her insurance background to help educate...

Former Licensed Agent

Editorial Guidelines: We are a free online resource for anyone interested in learning more about insurance. Our goal is to be an objective, third-party resource for everything insurance related. We update our site regularly, and all content is reviewed by insurance experts.

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