Insurance Deductible Break-Even Calculator
Roughly 5–6% of insured drivers and homeowners claim in a given year: about once every 17–20 years
Break-even
3.3 years
The higher deductible saves $150 a year and risks $500 more per claim. If you go 3.3 years or more between claims, it comes out ahead; you expect a claim every 8 years, so the higher deductible is the better bet.
Expected cost over 5 years
- $500 deductible
- $7,563
- $1,000 deductible
- $7,125
Premiums plus deductibles for an average of 0.6 claims. Take the higher deductible only if you could pay it tomorrow from savings; small claims below it are often not worth filing anyway, since they can raise your premium.
Decide between a lower and a higher insurance deductible for car or home insurance: how much the higher deductible saves in premiums, how long you need to go between claims for it to win, and the expected cost of each over several years.
Formula
Worked Example
The higher deductible saves $150 a year and costs $500 more per claim, so it wins as long as claims come less often than every 500 ÷ 150 = 3.3 years. With a claim expected every 8 years it saves about $438 over five years.
Frequently Asked Questions
Should I choose a higher deductible?
Usually yes, if you could pay it tomorrow from savings. Most people claim rarely (around 5–6% of insured drivers and homeowners in a given year), so the premium saving adds up while the extra deductible is paid only occasionally.
Should I file a small claim?
Often not. A claim for little more than the deductible pays you little and can raise your premium for several years or count against you at renewal. Many people treat the deductible as self-insurance and file only for larger losses.
Does a higher deductible lower premiums by the same amount everywhere?
No. The saving depends on the insurer, your state and the coverage. Ask for quotes at several deductibles: going from $500 to $1,000 often saves noticeably more than going from $1,000 to $2,500.