High Or Low Deductibles: The Logic Behind Both


When people are shopping for insurance, they have to consider what type of deductible they will want to go along with their policy. A deductible is the financial burden that you are willing to accept for each insurance incident. For example, if you choose a $200.00 deductible, then you will be responsible for the first $200.00 in expenses associated with your claim. You can choose between high and low deductibles, and there is sound logic behind choosing each option.

High Deductible

The biggest benefit of choosing a policy with a high deductible is that the monthly premiums are lower. If you are trying to keep your monthly expenses down, then choosing a high deductible can help reduce your monthly costs.

If you are able to plan for a high deductible incident, then paying the extra money before your insurance company starts paying is manageable. For example, if you know that you will be paying a high deductible for a surgery you have planned, then you can put together ideas to pay for that deductible that may not break the bank. But sudden insurance incidents with high deductibles can often leave the insured searching for ways to pay that extra money.

Low Deductible

Low deductibles have the opposite effect on your monthly premiums that high deductibles do. When you choose to pay less with each insurance event, you will wind up paying more per month in your premium. This is why some people ask about various levels of deductibles to find the one that fits their budget.

When you have a low deductible with your insurance, it is easier to handle sudden insurance incidents. Your car accident is not as much of a hassle because you know that your out-of-pocket expenses will be relatively low. When you decide on a low deductible policy, you should ask a lot of questions about how your insurance company handles incidents. Your deductible might be low, but that might mean that you would have to give up services such as roadside assistance or rental car payments. You should always make sure that you know exactly what you are getting when you decide to save money on an insurance policy.

Which Is The Best Option?

There is no right or wrong answer or choosing one deductible option over the other. If you would prefer to not have to pay a lot when you have an insurance incident and do not mind higher premiums, then go with the lower deductible. Remember that your insurance company offers a variety of deductible options, so explore all of those choices before making your final decision.

Your insurance policy is there to make sure that any sudden expenses are easier to handle from a financial standpoint. Before your policy goes into effect, you have to first choose a deductible. Choose the type of deductible that best fits your lifestyle, and remember that you can change your deductible any time you want.