Deductibles: the $500 vs $1,000 maths
Raising your deductible pays off only if you can cover it tomorrow. Here's the break-even.
Raising a deductible from $500 to $1,000 is one of the most common ways to lower a premium, and one of the most commonly miscalculated. The right answer depends less on the premium savings than on whether $1,000 is money you can produce without financial strain the day after an accident.
Working out the break-even
If raising your deductible saves a modest amount per year, it takes several years of that saving to cover the extra $500 you'd owe out of pocket on a single claim. If you file a claim before then, the higher deductible cost you money; if you don't, it saved you money. The decision is really a bet on how many years you'll go without a collision or comprehensive claim.
Collision and comprehensive don't have to match
Comprehensive claims — theft, weather, hitting an animal — tend to be smaller and more frequent than collision claims. Some drivers set a lower comprehensive deductible and a higher collision deductible, since the smaller, more common claims are the ones a lower deductible actually gets used on.
Don't raise a deductible past what you could pay in cash within a day or two. The premium savings aren't worth financing a repair on a credit card at a much higher rate than the insurance saved you.
This guide is general information, not insurance advice, and does not account for your state's specific regulations. Figures cited are industry estimates from published rate studies. VIP Car Insurance is a free comparison service and is not an insurer.