How to Select the Best Insurance Deductible

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By Amy Howarth
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Select the Best Insurance Deductible

Deductibles are a common part of insurance, whether on your property, auto, and even health insurance. An important part of your insurance decision-making process should be aimed at selecting the best deductible.

Difficulty: Moderately Easy

Instructions

Step 1

Determine how much you can afford. If you have to file a claim, the deductible is the portion that you are willing to pay before your insurance policy kicks in. For example, if you have homeowners insurance and have a fire, you must first pay your deductible in order for your insurance policy to pay the remaining damages. If you can’t afford your deductible, your home isn’t going to get repaired. Choose a deductible that you can easily come up with in the unfortunate event that you have a claim.
Step 2

Consider your monthly payment. What you set your deductible at will affect your monthly insurance premiums. The lower your deductible, the more your payment is going to cost. People who want to keep their deductibles low will budget in a higher monthly payment for their insurance.

It can be difficult sometimes to find a balance between keeping your monthly payment low and having a reasonable deductible. If you are really having a hard time finding what works best for you, counsel with your insurance agent to receive the best individual advice.
Step 3

Set money aside. Once you’ve determined your deductibles, adjust your savings account (or open one if you haven’t already) and start saving up for your deductible. You may never have to use it, but if you do the money will be there and you’ll have less to worry about.