Ohio Insurance: The High Price of Low Deductibles

Posted by Matt Simon on Aug 14, 2009

Did you know that low deductibles on your current auto, home and commercial insurance policies may be costing you more than you think?  Deductibles are often overlooked but can provide significant premium savings, especially over a period of time.

Your "deductible" is the amount you pay when you make a claim before your insurance company pays.  There are many reasons why deductibles exist and there are multiple options when choosing your deductible.

Essentially, there are many expenses associated with processing an insurance claim. Through the necessity of deductibles, the expense has been lowered for insurance companies when consumers participate in paying a portion of their own loss.  Insurance companies pass this savings onto consumers through lower premiums when consumers chose to increase their deductibles. 

When you pay small losses yourself you also get an additional premium break by keeping claims-free discounts on your policy.  It's common for insurance companies to provide substantial discounts on policies that have no claims, or very few claims.  Choosing a higher deductible means you might pay for the smaller claims out of your own pocket, but you also get to keep the claims-free discount on your policy.

Deductibles also reduce what insurance companies refer to as a "moral hazard."  Insurance fraud is a huge problem in our industry which costs us all more money.  If there was no cost to the party submitting the claim, dishonest people would generate even more fraudulent losses.

It's important that you review the deductible options you've chosen on your home, auto and commercial insurance policies.  Increasing your deductibles high enough that is affordable to you can provide an annual premium reduction, saving you significant money over time.

To discuss your various deductible options, contact our licensed advisors.  We're here to help!

Cyber & Data Liability Insurance eBook

Category: Homeowners Insurance (3), Business Insurance (3), Auto Insurance (3)