Deductible Choice Calculator
Work out how often you would have to claim for a lower deductible to be worth its extra premium, on car or home cover.
Claim frequency is a guess, and it is what the answer turns on. This compares cost only; it does not model the premium increase that often follows a claim, which pushes further towards the higher deductible. Nothing is uploaded.
The break-even is a claim rate
Dropping the deductible from $1,000 to $500 costs $120 a year in extra premium and saves $500 on the occasions you claim. So it pays for itself only if you claim more often than once every 4.17 years. That is the whole calculation: the extra premium divided by the saving, read either as 0.240 claims a year or as one claim every 4.17.
| If you claim | Ten years at $500 | Ten years at $1,000 | Cheaper |
|---|---|---|---|
| once every 20.0 years | $10,450 | $9,500 | higher deductible |
| once every 10.0 years | $10,700 | $10,000 | higher deductible |
| once every 4.2 years | $11,400 | $11,400 | lower deductible |
| once every 3.0 years | $11,850 | $12,300 | lower deductible |
| once every 2.0 years | $12,700 | $14,000 | lower deductible |
At the rates most policies actually run — one claim a decade, or less — the higher deductible wins by a clear margin. It only loses once claims arrive more often than every four years, which is a rate most drivers and homeowners never reach.
"Could I afford it?" is a different question
The reasoning people actually use is "could I find $1,000 in an emergency?" — which is about cash reserves, not about which option costs less. Both
questions are worth asking and they have different answers. If you genuinely could not raise
the higher deductible at short notice, buying it down is worth paying for, because the risk
it removes is not financial but practical. But it is a purchase rather than a saving, and the
figure above is its price: $120 a year, every year, to avoid needing
$500 once in a while.
Two cases have no break-even at all, and the calculator says so rather than quoting a number.
A lower deductible that costs nothing extra is simply better. One that saves nothing when you
claim is simply worse. Neither needs a claim rate to decide.
How to use
- Enter both deductibles and the premium each one carries.
- Say roughly how many years pass between your claims.
- Read the break-even claim rate.
- Compare ten-year totals at your own rate.
Frequently asked questions
Is a lower deductible worth it?
Only if you claim often enough. Dropping from $1,000 to $500 for $120 a year in extra premium saves $500 when you claim, so it pays for itself at one claim every 4.17 years. That is the whole calculation: the extra premium divided by the saving.
How often do people actually claim?
Far less often than the break-even usually requires. At one claim a decade the higher deductible wins comfortably in most quotes we have seen, and it only loses once claims arrive more often than every four years or so — a rate most drivers and homeowners never reach.
Should I not just pick the deductible I could afford?
That is a different question, and a fair one. "Could I find $1,000 in an emergency?" is about cash reserves, not about which option costs less. If you genuinely could not raise the higher figure at short notice, buying it down is worth paying for — but it is a purchase rather than a saving, and this tells you its price.
Does claiming affect my premium?
Frequently, and this comparison does not model it. A claim can raise your renewal for years, which pushes the answer further towards the higher deductible than the arithmetic here already does. It is also why a small claim close to the deductible is often not worth making at all.
What if the lower deductible costs nothing extra?
Then it is simply better and there is no break-even to work out. The calculator says so rather than dividing by zero. The mirror case is a lower deductible that saves nothing when you claim, which is simply worse.
Does this work for home insurance too?
Yes — it is the same shape wherever an excess is traded against a premium. Home claim rates are typically lower than car claim rates, which pushes the answer further towards the higher deductible.
How do I estimate my claim rate?
Count backwards. How many claims have you made in the last twenty years? That is a better guide than a feeling about risk, and it is usually a smaller number than people expect before they count.
Does this send anything anywhere?
No. Every figure is computed in your browser, and nothing is uploaded or stored.
🔒 This tool runs entirely in your browser. Nothing you enter is uploaded, logged, or stored.