What Deductible Do I Need?

When purchasing insurance, your deductible is what you will be responsible to pay in case of a claim. With most insurance companies, you are able to choose a deductible that will best suit your situation. For example, if you have a $100,000 claim with a $1,000 deductible, you will pay the first $1,000 and the insurance company will pay the rest.

The more you are willing to pay towards a claim, the lower your insurance premium will be. The company wants to “reward” you for agreeing to help share more of the cost. Choosing a $2,500 deductible or $5,000 deductible will make your premium lower than it would be with a $500 or $1,000 deductible. You want to make sure to choose a deductible that you would be able to pay immediately if a claim were to occur. Here are a few things to think about when deciding on a deductible.

Why should I increase my deductible?

Increasing your deductible can save you hundreds of dollars on your insurance premium. If you want to make a bigger impact on your premium, a higher deductible like $2,500 can help. Now you may not be able to pay $2,500 right now, but if you start to save the amount you aren’t spending on insurance premiums, you could have that saved up and secured pretty quickly. When figuring out how to choose the right deductible, your agent should be able to help you compare the costs.

What do you want to protect?

Another thing to consider is what are you most worried about protecting. If you feel like you are able to handle a few smaller losses, choose a higher deductible and “self-insure” for those smaller claims. If you are not a person who would file a claim if it was going to be under $2,500, it would be worth a higher deductible since you wouldn’t file the claim anyway.

If you are not financially protected enough to take on more of the risk, it may be worth paying extra each year to know you have a deductible that you can afford. In the future, as you build some savings, look at increasing your deductible.

How often do you make claims?

If you don’t think you’ll have to make an insurance claim, you could take a risk at increasing your deductible. But, remember that weather and accidents are unpredictable and just because you haven’t had any claims in the past, doesn’t mean you won’t in the future.

No matter what you plan for, claims are often out of our control. We want to make sure you are properly covered with a deductible you are comfortable with. Reach out to your Farm Bureau agent to make sure your coverage and deductibles are right for your situation.