Save Money on Your Insurance Premiums by Changing Your Deductible
Sign up for our FREE Monthly Email Newsletter
In addition to keeping in the financial know, you may be interested in checking your credit score and report.
¹The credit scores provided under the offers described here use the Equifax Credit Score, which is a proprietary credit model developed by Equifax. The Equifax Credit Score and 3-Bureau scores are each based on the Equifax Credit Score model, but calculated using the information in your Equifax, Experian and TransUnion credit files. The Equifax Credit Score is intended for your own educational use. It is also commercially available to third parties along with numerous other credit scores and models in the marketplace. Please keep in mind third parties are likely to use a different score when evaluating your creditworthiness. Also, third parties will take into consideration items other than your credit score or information found in your credit file, such as your income.
²The Automatic Fraud Alert feature is made available to consumers by Equifax Information Services LLC and fulfilled on its behalf by Equifax Consumer Services LLC.
³Equifax Credit Report Control™ is only available while you have a current subscription to Equifax Complete Premier. Locking your credit file with Equifax Credit Report Control will prevent access to your Equifax credit file by certain third parties, such as credit grantors or other companies and agencies. Credit Report Control will not prevent access to your credit file at any other credit reporting agency, and will not prevent access to your Equifax credit file by companies like Equifax Personal Solutions which provide you with access to your credit report or credit score or monitor your credit file; Federal, state and local government agencies; companies reviewing your application for employment; companies that have a current account or relationship with you, and collection agencies acting on behalf of those whom you owe; for fraud detection and prevention purposes; and companies that wish to make pre-approved offers of credit or insurance to you. To opt out of such pre-approved offers, visit www.optoutprescreen.com/.
4We will require you to provide your payment information when you sign up and we will immediately charge your card $4.95. After that, we will charge the card $19.95 for each month you continue your subscription. You may cancel at any time; however, we do not provide partial month refunds.
Equifax® is a registered trademark and Equifax Complete™ Premier is a trademark of Equifax, Inc. © 2014, Equifax Inc., Atlanta, Georgia. All rights reserved.
During these tough times, people are looking for different ways to reduce the increasing cost of insurance. One of the first places to look is the deductible. A deductible is the amount of money the insured pays before the insurance company pays the balance of the claim.
The higher the deductible, the lower the premium. A carrier discounts a policy for a higher deductible for a couple of reasons. Obviously, the carrier has to pay less money, compared to what it pays per claim. The higher the deductible, the more money the insured has to pay out of pocket. This may translate into the insured exercising extra care to avoid paying exorbitant out-of-pocket costs. A deductible helps reduce the carrier costs because the carrier doesn’t have to pay on relatively small claims.
Here are some suggestions for deductible levels on various insurance policies:
We typically quote $500 on the collision deductible and $250 on the comprehensive. What we’ve seen is that there is not much difference between $500 and $250. The biggest cost factor is in the collision deductible.
Also, depending on the type of car, the driver’s motor vehicle report (MVR), and the financial status of the insured, it may be worth checking the math to determine if there is a substantial enough difference between the policy and premium to go with a higher deductible.
We typically suggest $1,000 for most single-family dwelling homes. For high-value homes, where the dwelling limit is over $2 million, the policyholder might need to maintain a higher deductible, around $5,000 to $10,000.
Typically, a deductible applies to property damage. Most deductibles do not apply to liability claims. Depending on the value of the contents or the building, it’s worth it to play with the deductibles to see what kind of reduction you can get in the premium.
With professional liability, the word “retention” is synonymous with deductible. It’s the amount of money you pay before the carrier will pay. In most cases, the options are $2,500, $5,000, and $10,000.
There is conflict within the health insurance industry—policyholders are experiencing double-digit increases and fewer options as mergers leave fewer carriers from which to choose. Carriers are offering in-network deductibles, which policyholders didn’t see ten years ago. It can be a difficult reality to pay high premiums and still potentially be faced with high out-of-pocket expenses.
Take a look at my previous post on high-deductible health insurance options for more explanation.
Disability & Long-Term Care Insurance
The deductible in these cases is known as a “waiting period.” The insurance company starts paying benefits after a certain number of days have elapsed. A 90-day waiting period is standard. The waiting period is a form of being self-insured. The longer you wait, the lower the premium. Waiting periods vary: 30 days, 60 days, 90 days, 180 days, or 365 days.
With all insurance policies, there’s a wide range of options. Before you get frustrated and make rash decisions about reducing coverage or moving your policies from your agent, consider different deductible options.
Equifax maintains this interactive forum for education and information purposes in order to allow individuals to share their relevant knowledge and opinions with other members and visitors. We encourage you to participate in discussions about personal finance issues and other topics of interest to this community, but please read our commenting guidelines first. Equifax reserves the right to monitor postings to the forum and comments will be published at our discretion. Do you have questions or comments about your Equifax credit report or customer-service issues regarding an Equifax product? If so, please contact Equifax directly. All opinions and information expressed or shared in blog comments are solely those of the person submitting the comments, and don't necessarily represent the views of Equifax or its management.