High or Low Deductible?

When you sign up for your new insurance policy, one of the most important things you need to decide is what deductible amount should you go with? When making a claim you are responsible to pay your deductible, then your insurance company covers any expenses over and above that amount. This blog will shed some light on the deductibles and what it means for you.

The insurance deductible was created is to prevent small, unnecessary claims from being submitted. Numerous claims can drive up insurance costs, so it is often best to save your “claims” for when you really need them.

One advantage of choosing a higher deductible is the premium savings. Generally, the higher your deductible, the lower the insurance cost. Some insurance companies even offer extra discounts for higher deductibles. Saving money is obviously a good thing, but you still need to consider what happens if you need to make a claim? Claims can occur when we least expect them and a higher deductible may force you to cover that costs when you can least afford it.

A low deductible will increase the cost of your premium, however, it pays off in the event of an emergency or claim. Low deductibles also enable you to claim smaller damages and thus have less out-of-pocket expenses at that time. Since it is impossible to predict when a claim might happen, a low deductible is a great way to safeguard against large, unexpected repair bills.

To help you determine a deductible amount appropriate for you, consider these questions:

1. What claim amount am I comfortable with taking care of on my own?
2. When was the last time I had a claim?

It really boils down to what you can financially handle when you have to make a claim. If you are living month-to-month on a tight budget, then a lower deductible might be better for you. If you are good at setting aside “emergency funds”, then a higher deductible could be best for you.

With personalized service, our experienced Bauld Advisors put your interests first and recommend products, coverages and deductibles right for you and your budget.

– Team Bauld