A certain saving against an uncertain cost.

The facts, in one place.

Six quotable sentences on raising a deductible.

1. Raising a deductible trades a certain saving for an uncertain cost. The premium falls every year whether or not you claim. The extra out of pocket is paid only when a claim comes, and only then.
2. The break-even is the claim rate at which the two match: the yearly saving divided by the extra per claim, read as one claim every so many years. Claim less often than that and the higher deductible wins.
3. Example: raising a deductible from $1,000 to $2,500 cuts the premium from $2,400 to $2,100, a saving of $300 a year against $1,500 more on each claim. The break-even is one claim every 5 years. At one claim in ten years, the expected saving is $150 a year.
4. Over 10 years the same choice leaves you $3,000 ahead with no claims, $1,500 ahead after one, and $0 after two.
5. Small claims cost more than their amount. Many insurers raise the premium after a claim or decline to renew after two, so a higher deductible that keeps small claims off the record is worth more than the arithmetic shows.
6. The number that decides it is not the break-even. It is whether the higher deductible could be paid tomorrow, from savings, without borrowing. If it could not, the lower deductible is the right one whatever the premiums say.

By how often you claim.

How the expected saving falls as claims come more often.

How the break-even works.

A deductible is the part of each loss the insured retains, and a higher one is a smaller policy, priced accordingly. The premium saving is certain and annual; the cost is the difference between the two deductibles, paid only when a claim large enough to reach the higher one arrives. Divide the yearly saving by the extra per claim and the result is a claim rate, the number of claims per year at which the two match; its reciprocal reads as one claim every so many years. A household that claims less often than that is better off with the higher deductible in expectation, and the expected saving per year is the premium saving less the claim rate times the extra.

Two things sit outside the arithmetic and both favor the higher deductible. Claims are rated: a paid claim commonly raises the premium at renewal and, in the property lines, a second within a few years can bring non-renewal, so a deductible high enough to keep small losses off the loss-run is worth more than the premium difference alone. And a deductible is only sensible if it can be paid on the day of the loss, which is why the tool checks it against emergency savings and says plainly when it exceeds them. The claim rate itself is a guess, and the table shows the answer at several so the guess can be argued.

Methodology.

1. Inputs. The current and higher deductibles, the yearly premium at each, the claims expected in ten years, emergency savings on hand, and the years to look at.
2. The two sides. The saving per year is the premium at the current deductible less the premium at the higher, never below zero. The extra per claim is the higher deductible less the current.
3. The break-even. Saving over extra, in claims per year; extra over saving, as one claim every so many years. Undefined when either is zero, and the tool says which.
4. Expected and cumulative. The expected extra per year is the claim rate (claims in ten years over ten) times the extra; the net is the saving less that. The position after each year is the saving times the years, less the extra for each claim assumed, with none, one, and two.
5. Affordability. The higher deductible is affordable when it does not exceed emergency savings.
6. Validation. A 1,000 to 2,500 deductible saving 300 a year: extra 1,500, expected extra 150 at one claim in ten years, break-even 0.2 claims a year and one every five years, the ten-year position 3,000 / 1,500 / 0 and the year-one position with a claim at minus 1,200; a claim rate at the break-even giving zero net; and a no-saving case with the break-even undefined and affordability failing on thin savings. A transcription error fails the build.
7. Not modeled. Premium surcharges and non-renewal after a claim, claims smaller than the higher deductible, more than two claims in the period, percentage and named-peril deductibles, and what the saved premium could earn. Hypothetical throughout. Educational, not advice.

Revision history.

The property and casualty tools' history.

September 7, 2026

First release of three property-and-casualty assumption tools: how much umbrella coverage (non-exempt net worth plus the present value of the reachable share of future income, less the underlying auto and home limits, rounded up to the next million), the coinsurance rule (required coverage as the policy's share of rebuild cost, the claim paid in proportion when coverage falls short, less the deductible and capped at the limit), and raise the deductible (premium saving against the extra out of pocket per claim, the break-even claim frequency, and the position over the years with none, one, and two claims).

Canonical address: https://consideratecapital.com/tools/raise-the-deductible