Jul 23 2009

It doesn’t always pay to go with the highest insurance deductible


A general rule of thumb states that opting for the highest insurance deductible you can afford will ultimately save you money.

As usual, it pays to run the numbers.

We’re renewing our renters insurance. Our deductible is $500. Our premium is $114 for the year.

Raising it to $1,000 would lower my annual premium by about $10.

So, I could save $10 per year if we don’t have to file a claim, but if we do (and let’s hope we never do!) it’ll cost me an extra $500.

I’d rather pay an extra $10 per year just in case.

One more thing: Our regular renters insurance policy doesn’t cover floods from rainwater or other outside causes. It does cover floods from burst pipes, though. Since we’re on the ground floor and our windows open up to, well, the ground, I think it’s worth paying an extra $130 per year for $30,000 in coverage.

Posted under Uncategorized | 1 Comment »

One Response to “It doesn’t always pay to go with the highest insurance deductible”

  1. Speaking as someone whose condo was rebuilt from the studs out twice, I want to emphasize the importance of what you were saying about including water damage in the insurance!

    The first time there was a fire in the suite 2 floors above me. In addition to activating the building sprinklers, do you have any idea how much water putting out a 4 alarm fire entails? And where does all that water go? Down! I was on the first residential level and was the hardest hit suite other than the one that was actually on fire.

    The second time, the people directly above me knocked off a sprinkler head accidently and the entire sprinkler system discharged into their suite, and from there into mine. I actually had much more damage than they did because their damage was mostly to the floor and lower walls. My ceiling came down, my kitchen cabinets split apart, I lost 90% of the furniture in the living room, all my wood floors, etc.

    Definitely have adequate insurance! I can’t tell you how glad I am that I did!

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Hey! I'm Kacie, wife and mother of 3. I write about my family's finance: how we save money, improve our spending, and plan for the future.

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