Question 1

What is an insurance deductible?

Accepted Answer

A deductible is the amount you generally pay out of pocket on a covered claim before the insurer pays the remaining covered loss, subject to your policy's terms.

Question 2

Does a higher deductible lower premiums?

Accepted Answer

Often, choosing a higher deductible lowers the premium because you take on more of a potential loss. The actual premium change is determined by the insurer and policy.

Question 3

How is deductible break-even calculated?

Accepted Answer

The claim-probability break-even compares annual premium savings with the additional out-of-pocket deductible. At that probability, the estimated expected cost of each choice is equal.

Question 4

Should I choose the highest deductible?

Accepted Answer

Not always. A higher deductible only works if you can comfortably pay it after a covered loss. Consider your emergency savings, risk tolerance, policy exclusions and quote details before deciding.