Is High Deductible Insurance a Good Choice?

One very easy way to save money with auto insurance—and even home insurance, earthquake insurance, flood insurance etc—is to keep a high deductible. What do I mean by that?

So, let's take auto insurance. Overall, I'm a pretty decent driver. I don't have much history of traffic violations, accidents, or anything like that. I knowingly keep my deductible pretty high, a thousand dollars minimum, typically even higher if the policy offers. Why? If you think about it, if you get into an accident, then you being at fault; there's a 50% probability. If you are not at fault, the other party who's at fault will likely pay all your expenses, so there is no deductible.

If you are at fault, you will still pay, but the deductible will be higher. But the chances are, if you especially know yourself and you are a good driver and you live in a good area, the chances of you paying that deductible are very low.

For instance, so far, over 20 years of living in the US, I've had to pay a deductible out of pocket, maybe twice in 20 years. But that 500 extra every time has saved me approximately six to seven thousand dollars in insurance premiums over that time. That money, invested in stocks, gives much better results.

So, I urge you to look at your auto insurance policy, look at the deductible, look at your earthquake, insurance, flood insurance, look at the deductible, and based on the probability of everything, evaluate and opt for a slightly higher deductible, which is likely to give you a better price that you pay every month, every year.

Hope this was helpful, and if you have any questions, feel free to reach out via social media, and happy to answer your questions.