Setting a low deductible may sound like a great idea, but typically it means higher premiums and in the case of property and casualty insurance, a greater likelihood of small claims that could ultimately raise your premiums.
If your deductible is low, you may be inclined to turn in claims that you otherwise wouldn’t have, because the deductible would have been more than the actual repair cost. This additional number of claims will ultimately have a negative effect when the underwriters calculate your new year’s premium.
Insurance is designed to protect you against losses that you normally could not afford to cover yourself. So, if you can afford to pay the first $500 or $1,000 in losses yourself, you may not need a lower deductible.
In the case of health care insurance, a lower deductible most certainly means higher premiums, sometimes much higher. Unfortunately, it all too often also means a lack of proper coverage. I’m sure we’ve all heard about the mishaps of people who did not choose wisely.
Consider your own financial situation, how much of the risk are you willing to assume before you make a claim and the insurance company pays on your claim? You really have to think about how much of that loss you could or would be willing to pay yourself.
Your independent insurance agent can give you the facts that you need to make an informed decision!