Question
Should I raise my deductible to lower my monthly bill?
I'm thinking about raising my deductible to bring my monthly payment down. Is that a good idea? I don't have a lot of savings, though, right now, and I'm just trying to get through the month. I guess I want to know if there is a reason not to do it.
Answer
Beth joined The Zebra in 2022 as an Associate Content Strategist. A licensed insurance agent, she specializes in creating clear, accessible content t…
Credentials
- Licensed Insurance Agent — Property and Casualty
- Associate in Insurance (AINS)
- Professional Risk Consultant (PRC)
- Associate in Insurance Services (AIS)
Your deductible is something you can change pretty easily to lower your monthly insurance bill without sacrificing your coverage level. However, the catch is that whatever amount you choose, that's the amount of money you'll need to pay if you file a claim.
Your deductible is what you pay out of pocket before your insurance kicks in after a claim. Raising it from $500 to $1,000, for example, shifts more of the financial risk onto you in exchange for a lower monthly premium. But if something happens and you need to file a claim, that amount would be deducted from the payout you'd get. As a basic example, if you file a claim that amounts to $2,000 in damage and your deductible is $500, you'll only get $1,500 from your insurance company.
The difference in your premium based on deductible amount is around a few hundred dollars a year. In a state like Louisiana, where the median annual premium is already $3,342, that savings can feel meaningful, but it may not be worth it. Our recent State of Insurance report found that 25% of drivers couldn't afford to pay their deductible if they needed to.
So before raising your deductible, ask yourself honestly: if I got into an accident tomorrow, could I come up with $1,000? If the answer is no (or not easily, without major sacrificing) then a lower deductible might actually be worth the higher monthly cost. Peace of mind has value too, especially when you're already stretched thin.
If you do decide to raise it, even setting aside a small amount each month toward an emergency fund earmarked for that deductible can make a real difference. It's also worth comparing quotes from multiple insurers and asking about discounts before assuming a higher deductible is your only option for savings.
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