Understanding Deductibles and How They Impact Your Premiums
When shopping for an insurance policy—whether it’s auto, home, health, or beyond—one of the most important decisions you’ll make is choosing a deductible. But what exactly is a deductible, and how does it affect what you pay each month?
At Stanton Insurance Group, we believe insurance shouldn’t be confusing. Here’s a simple breakdown to help you understand deductibles and how they play a key role in determining your premiums.
What Is a Deductible?
A deductible is the amount you agree to pay out of pocket before your insurance coverage kicks in.
For example, if you have a $500 deductible on your auto policy and you file a claim for $2,000 in damages, you’ll pay the first $500, and your insurance company will cover the remaining $1,500.
How Deductibles and Premiums Work Together
In general, the higher your deductible, the lower your premium—and vice versa.
- High Deductible = Lower Premium: You pay less each month, but more out-of-pocket if you file a claim.
- Low Deductible = Higher Premium: You pay more monthly, but less at the time of a claim.
This trade-off lets you tailor your policy to your needs and risk tolerance.
Finding the Right Balance
So, how do you decide which deductible is right for you? Here are a few things to consider:
1. Your Budget
Can you comfortably cover a higher deductible in an emergency? If so, you may save money with a lower premium.
2. Your Risk Profile
If you rarely file claims or have a good driving/home history, you may benefit from a higher deductible and lower monthly payments.
3. Your Coverage Needs
For health insurance, high-deductible plans can be paired with Health Savings Accounts (HSAs), which offer tax benefits, but they’re best for those who don’t need frequent medical care.
Real-World Example
Let’s say you’re comparing two auto insurance plans:
| Plan | Deductible | Monthly Premium |
|---|---|---|
| A | $1,000 | $80 |
| B | $500 | $110 |
Plan A saves you $30/month—or $360 a year—but you’ll pay more if you get into an accident. Choosing the best plan depends on how often you expect to file a claim and what you can afford up front.
We’re Here to Help
Understanding deductibles is just one part of the insurance puzzle, but it’s a big one. At Stanton Insurance Group, we work with you to find the right balance between cost and coverage, so you’ll never caught off guard when it matters most.
Have questions about your deductible or want a personalized quote? Contact our team today—we’re here to simplify the fine print and help you protect what matters.
