The Deductible Debate

Deductibles are a great way to manage insurance costs.  As you increase the deductible and retain some of the risk yourself, the cost of your insurance goes down. 

So what's the right deductible?  That depends on your appetite for deductibles and the type of policy.  Higher deductibles are a great fit for clients that can afford to retain a larger portion of a loss.  If you can't absorb a higher deductible financially, don't change it.

Since rate structures vary among the many types of insurance policies, there is no one deductible that should be applied across the board.  On homeowners policy we recommend that clients consider $1,000 to save some premium.  Submitting small claims creates a loss history that can impact your rates and your insurability.  If a $1,000 is too much to swallow, stick with $500 at a minimum.

The Collision and Comprehensive deductibles on the auto policy should be $500.  If you have youthful operators on your policy or if you have points on your driving record, $1,000 will take the edge off your monthly bill.

Deductibles are also an important tool for business owners to control costs.  Rates vary between classes of business, so it's very subjective.  We can help you weigh the options carefully.

Need to free up premium for other insurance products that are missing from your insurance program?  Deductibles are your answer.  Increasing the deductible on your homeowners, for example, would allow you to add the Personal Umbrella Coverage that you are missing or the jewelry coverage that you don't have.

The next time you take a look at your insurance renewal, consider the higher deductible to help manage your insurance costs.

Regards,

Edward P. Hackett, CIC CRM

Vice-President