734.641.8400 March 2019
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February 2019
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2019 PSCU
Board of Directors
Frederick W. Morgan

Jeffery King
Vice Chairperson

Dean J. Trudeau

Edward A. Carey, Jr.
Charles Lowler
 Dale Reaume
Nora Sharpley
Credit Committee
Veronica Massey
Huey Ferguson
Juanita Henry
When You Should Increase Your Deductible
Scenarios that might justify a higher deductible

Raising your deductible — the specified amount of money you must pay an insurance company before they pay a claim — is one way to save on monthly premiums. However, this decision is best for only a handful of situations. Discover what circumstances might legitimize a higher deductible, as well as some strategies for adjusting your deductible for different coverages.

A general rule of thumb

Regardless of what type of insurance you’re considering raising your deductible for, there are some general guidelines to consider before making this decision. The Balance contributor Mila Araujo explains that increasing the deductible for home, auto or health insurance can benefit you if you have a sufficient emergency fund to pay out-of-pocket for damages. If you do decide to raise the deductible, she advises raising it to the amount you’re financially comfortable in paying out of pocket.

Homeowners insurance

Raising your homeowners insurance deductible is one way to reduce monthly premiums explains Nancy Albanese, vice president of personal insurance for Powers Craft Parker & Beard, in an article for U.S. News & World Report. If your home is at low risk for accidents such as hurricanes, electrical fires and flooding — due to installed safety features like smoke detectors, fire extinguishers and hurricane shutters— it might be wise to consider raising the deductible on your insurance.

Auto insurance

According to the DMV, your driving record is one factor that might justify an increased deductible for your auto policy. For example, if you’ve never been in an accident and make a habit of driving safely, you might opt for a higher deductible. You might also consider having different deductible amounts for certain types of auto coverage. For example, The Balance contributor Emily Delbridge suggests increasing a $100 deductible on comprehensive and $500 on collision to $500 and $1,000, respectively.

Health insurance

Per Nerd Wallet contributor Lacie Glover, raising your deductible for health insurance coverage is a good idea if you meet the following criteria:

  • You are healthy and rarely need medical care
  • You’re financially able to make significant monthly contributions to an HSA
  • You are healthy and interested in using an HSA as an alternative savings account and you can afford to pay a deductible either within 30 days of receiving the medical bill or can pay for the total cost of a medical claim upfront.

A higher deductible is also better-suited for a single person than a family, since annual deductibles can be twice as high for families, according to Consumer Reports contributor Donna Rosato.

While raising your deductible can be a wise move for some individuals, it’s best to evaluate your unique circumstances and coverage needs before making your decision. If you do happen to fall into one of the few situations where it might benefit you to raise your deductible, consider doing so to reap the benefits of lower premiums.

Published by Public Service Credit Union
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Disclaimer - All content contained in this newsletter is for informational purposes only and should not be relied upon to make any financial, accounting, tax, legal or other related decisions. Each person must consider his or her objectives, risk tolerances and level of comfort when making financial decisions and should consult a competent professional advisor prior to making any such decisions. Any opinions expressed through the content in this newsletter are the opinions of the particular author only.  

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