Raising Your Deductible – Weighing the Risks vs. the Benefits (2025)

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

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.

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.

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.

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.