Many times it has been brought up in presentations if a higher deductible is worth the savings. Let me start out that this discussion is aimed at Commercial Insurance and not Group Benefits or Health Insurance – that would be a totally different conversation.
Some things to consider before making the decision on a higher deductible: 1.) Can you afford the deductible difference - example, going from a $ 1,000 deductible to $ 5,000? 2.) Claim frequency - Do you have 1 to 3 claims per year or have you been claims free for the last 10 years?
If you were to take the property deductible from $ 1,000 to $ 5,000, the savings would be in the area of around 7-9 % of the PROPERTY premium only. People think that the savings is on the Total Premium…that would be incorrect; it’s only on the property premium. Your total account might be $ 90,000 and the property premium might be $ 7,000, so would the annual savings of $ 600.00 be worth it? If you had one claim every six to seven years, it would be a wash at the end of that seven year period.
I realize that not everyone is comfortable with a higher deductible because of the “huge” out of pocket expense. Others would consider putting the savings in an emergency fund, so they would have the money at the time of a claim.
Yes, at the end, it’s your call, but make sure you’re at ease with the final decision.
