If you’re looking for ways to lower your insurance premium, one of the first options you may come across is raising your deductible.

It sounds pretty straightforward: Choose a higher deductible, pay a lower premium.

And in many cases, that’s exactly what happens.

But at Lew Griffin Insurance Group, we think there’s a more important question to ask:

How much could you comfortably afford to pay tomorrow if you had a claim?

Because saving money on your premium is great. Saving a few dollars each month only to discover that you can’t comfortably cover your deductible after an accident, storm or other loss isn’t.

Here’s what Ohio homeowners and drivers should consider before choosing a higher insurance deductible.

First, What Is an Insurance Deductible?

An insurance deductible is generally the amount you’re responsible for paying toward a covered loss before your insurance coverage pays the remaining covered amount, subject to the terms and limits of your policy.

For example, imagine you have a $1,000 homeowners insurance deductible and experience $8,000 in covered damage. You would generally be responsible for the first $1,000, while your insurance would respond to the remaining covered loss according to your policy.

Deductibles can apply differently depending on the type of insurance and coverage involved, which is one reason it’s important to understand the specific policy you’re purchasing rather than simply choosing a number from a dropdown menu.

Does a Higher Deductible Lower Your Insurance Premium?

Generally, yes.

When you choose a higher deductible, you’re agreeing to assume more of the financial responsibility if a covered claim occurs. In exchange, the insurance company will often charge a lower premium.

That’s why increasing a deductible can be one way to explore lowering your homeowners insurance premium or auto insurance premium.

But there’s an important catch:

The cheapest premium does not necessarily mean the best insurance decision.

Consider someone choosing between a $500 deductible and a $2,000 deductible. The $2,000 option might save money on the annual premium—but that person is also taking on an additional $1,500 of potential out-of-pocket expense when a covered claim subject to that deductible occurs.

The real question is whether the premium savings are worth taking on that additional risk.

The Question We Like Better: Can You Afford Your Deductible?

Imagine a Central Ohio thunderstorm rolls through overnight and causes covered damage to your home.

Or you walk outside after shopping and discover significant damage to your vehicle.

That’s not the moment you want to realize your deductible is much higher than you remembered.

Before increasing a deductible, ask yourself:

“If I had a covered claim tomorrow, could I comfortably pay this amount without creating another financial problem?”

If the answer is no, the premium savings may not be worth it.

If you have sufficient emergency savings and are comfortable assuming more of the smaller losses yourself, however, a higher deductible may be worth considering.

There isn’t one deductible that’s right for everybody.

$500, $1,000 or $2,500: Which Deductible Is Best?

We wish there were one easy answer.

There isn’t.

The right deductible depends on several factors, including the value of the property you’re protecting, your available savings, how much the higher deductible actually reduces your premium and your personal comfort with financial risk.

Instead of simply asking, “Which deductible gives me the cheapest insurance?”, consider asking:

“What am I actually saving by taking on this additional risk?”

That comparison can be revealing.

Suppose increasing a deductible from $1,000 to $2,500 saves you $200 per year. You’re assuming another $1,500 of potential out-of-pocket expense in exchange for that annual savings.

That doesn’t automatically make the higher or lower deductible the better choice. But now you’re making the decision with the numbers in front of you.

And that’s exactly how we believe insurance decisions should be made.

Don’t Forget About Percentage Deductibles

This is one homeowners should pay particular attention to.

Not every deductible is necessarily expressed as a flat dollar amount. Depending on the policy, insurer and type of loss, you may encounter deductibles expressed as a percentage of the home’s insured value.

A percentage can sound small until you calculate the actual dollars.

For example, a 2% deductible on a home insured for $400,000 would equal $8,000.

That’s a dramatically different financial responsibility than a $1,000 or $2,500 flat deductible.

When reviewing homeowners insurance, don’t stop at asking what the premium costs. Ask what deductibles apply, when they apply and what those deductibles mean in actual dollars.

Your Auto Insurance Deductibles Deserve a Look, Too

When people talk about an auto insurance deductible, they’re often talking about collision and comprehensive coverage.

You may be able to select different deductible amounts for these coverages. Raising one or both could reduce the cost of your auto insurance, but again, you should understand the tradeoff.

If increasing your deductible saves relatively little each year but leaves you responsible for substantially more after a covered loss, you may decide the savings aren’t compelling.

On the other hand, someone with sufficient savings may prefer to assume more of that risk in exchange for a lower ongoing premium.

This is where having an agent actually run the numbers can help.

Before Raising Your Deductible, Ask Your Agent to Show You the Savings

This may be the most important takeaway.

Don’t raise your deductible because you’ve heard it’s a good way to save money. Find out exactly how much it would save you.

Ask to see the premium at several deductible levels.

For example:

Deductible	Annual Premium	Annual Savings
$500	$X	—
$1,000	$X	$X
$2,500	$X	$X

Once you see the actual numbers, you can make a much more informed decision about whether taking on additional financial responsibility makes sense.

Sometimes the savings can be meaningful.

Sometimes you’ll look at the difference and decide you’d rather keep the lower deductible.

There May Be Better Ways to Lower Your Insurance Costs

Your deductible shouldn’t be reviewed in isolation.

If the real goal is to lower your insurance premium, there may be other opportunities worth exploring: bundling home and auto insurance, reviewing available discounts, updating driving or household information, eliminating unnecessary coverage, adjusting coverage appropriately, or simply comparing rates among different insurance companies.

That’s where working with an independent insurance agency can be particularly helpful.

Lew Griffin Insurance Group can compare coverage and pricing among multiple insurance companies rather than limiting the conversation to a single carrier.

The goal isn’t simply to find the lowest number.

It’s to find a combination of price, coverage and financial responsibility that makes sense for you.

Central Ohio Insurance Has Changed. When Did You Last Review Yours?

Home values, repair costs, vehicle prices and insurance premiums have all changed significantly over the years.

Yet plenty of people continue renewing essentially the same policy without taking a fresh look at their deductibles and coverage.

If you live in Gahanna, New Albany, Blacklick, Pickerington, Baltimore, Columbus or elsewhere in Central Ohio, it may be worth reviewing your home and auto insurance before your next renewal.

You might discover that a higher deductible could save you meaningful money.

You might discover that your current deductible is already exactly where it should be.

Or you might find savings somewhere else entirely.

Your Insurance Is Only as Good as Your Agent.

At Lew Griffin Insurance Group, we don’t believe an insurance conversation should begin and end with, “Here’s the cheapest option.”

We’d rather show you the choices, explain what you’re giving up—or taking on—and help you understand what each option means when you actually need your insurance.

Thinking about raising your deductible to lower your premium?

Talk with Lew Griffin Insurance Group. We can compare the numbers and help you understand your options before you make the change.

Lew Griffin Insurance Group
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