How Can I Choose The Right Car Insurance Deductible?

Actually, there is no right answer here. Everyone has their own unique situation and variables to consider. We’ll look at a couple of things you should consider before taking out that super high deductible car insurance policy to “save yourself money.”

Some of the most common personal finance advice that you’ll run across suggests that you should take out the highest deductible possible that save yourself money every month. Well, I decided to take my own information and run some numbers. I looked at the difference on car insurance with a $50 deductible, $250 deductible, and a $500 deductible on both comprehensive and collision. You can check out the details in a post I created here: Does High Deductible Car or Home Insurance Actually Save Money?

What did I find? Going from a $50 deductible to a $250 deductible, I’d have to go ~4.8 years without a claim to break even. This means that if I had an accident where I was at fault more than once every 4.8 years I’d actually be better off just going with the $50 and paying the higher premium. Well, I believe I could probably make it 5 years without an accident just based on my history, so $250 it is! Now, should I press my luck and go for the $500 deductible to save even more?

When running the numbers, going from a $50 to a $500 deductible, I’d have to go 14 years without a collision claim. Well, there’s just about no way we could do that. So, this means that over the long run, we’d probably lose money by going with the highest collision deductible.
I’d encourage you to run the numbers for yourself to see where it comes out. I found the sweet spot to be around $250 for our family’s needs with the $500 or $1,000 to be completely out of the question, but your prices may show something different. This is a real case where doing a little bit of homework can really make sure you are penny wise and pound foolish!

Good luck car insurance shopping!!!

About The Author

Derek Chamberlain

Hi! My name is Derek Chamberlain and I am happy owner of! I'm a married guy in my 30's with two young kids. I blog about all things money: making more of it, saving more of it, and wisely investing it. What makes me such an expert at money? Nothing really - I just have a fascination and drive to become wealthy through saving more, making more, and investing better. I've made my share of mistakes that I hope to share with you along the way. Join me on my journey; together we'll learn and share our best tips and tricks to building riches and leading more fulfilling lives.

6 comments on "How Can I Choose The Right Car Insurance Deductible?"

  1. What state are you in?  For us, the $500 was the sweet spot, giving us a break even over the $250 deductible (the lowest offered) at just under 4 years.  Moving to the next higher deductible ($1000) would given us a small discount above the $500 deductible, but the break even would have been further out and not worth it to us.

  2. BudgetBlonde says:

    I saved 29% with the Progressive snapshot program. Still not sure what happened with that 1% haha.

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