Personal Finance

Help me decide on home insurance deductible: $1000 vs $2500

  • Last Updated:
  • Nov 10th, 2018 10:14 am
[OP]
Deal Addict
Apr 18, 2013
1851 posts
608 upvotes
Canada

Help me decide on home insurance deductible: $1000 vs $2500

My home insurance is up for renewal. Current deductible is $1000. I have a healthy emergency fund of around $20k, no including my TFSA's and other investments. I'm considering raising the deductible to $2500 which would lower my premium by $57 a year. I inquired and asked how much my premium would increase if I ever filed a claim, and they said all I would lose is the claims free discount for 3 years, which is about $150 per year. There would be no other increase to my premium for a first claim, asides from regular inflation increases every year.

Based on this, should I go with a $1000 or 2500 deductible? My thinking is that anything less than, or around the deductible, I would simply not file a claim an use my emergency fund, because for example, a $1000 claim would essentially end up costing me $1500 ($1000 deductible + $500 increase in premiums over 3 years).
7 replies
Jr. Member
Jul 18, 2015
140 posts
102 upvotes
Vancouver, BC
Like any type of insurance, it is up to you to determine how much risk you accept.

For me, I'm the type of guy that only gets insurance if it was required (auto and home for mortgage).
I'm always set on the mentality that I will not ever use this insurance unless it's a significant loss (house burned down, car totaled).

So I set my deductibles high. A lot of people argue "it's only $57 a year", but ask yourself, how likely is something significant to happen to your home.
[OP]
Deal Addict
Apr 18, 2013
1851 posts
608 upvotes
Canada
cluie29 wrote:
Nov 8th, 2018 12:51 pm
Like any type of insurance, it is up to you to determine how much risk you accept.

For me, I'm the type of guy that only gets insurance if it was required (auto and home for mortgage).
I'm always set on the mentality that I will not ever use this insurance unless it's a significant loss (house burned down, car totaled).

So I set my deductibles high. A lot of people argue "it's only $57 a year", but ask yourself, how likely is something significant to happen to your home.
That is how I'm leaning as well...I expect to never file a claim. But that's probably what most people say...
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May 8, 2009
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gbill2004 wrote:
Nov 8th, 2018 12:55 pm
That is how I'm leaning as well...I expect to never file a claim. But that's probably what most people say...
At $57/yr, I wouldn't bother increasing the deductible.

Perhaps shop around for another insurance company that is $57+ cheaper per year for the same deductable Thinking Face
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Jr. Member
Jan 30, 2017
193 posts
20 upvotes
Where are you shopping around for home insurance.. I am looking for home and car insurance my policy renewal is coming up
Deal Addict
User avatar
Jul 31, 2007
1940 posts
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OP, go with $2500 deductible or even higher, as high as you can afford, b/c making a claim on a small amount will count "against" you come renewal time and up goes your rate.
Deal Addict
Jan 15, 2017
1751 posts
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The risk versus the savings wouldn't be worth it for me. The savings is only $57 annually and the potential outlay for you is an additional $1500. $1500/$57 = 26.3 years. If you have to make a claim at all in 26. 3 years, you will wipe out any savings from the higher deductible.
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May 17, 2018
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skeet50 wrote:
Nov 10th, 2018 8:40 am
The risk versus the savings wouldn't be worth it for me. The savings is only $57 annually and the potential outlay for you is an additional $1500. $1500/$57 = 26.3 years. If you have to make a claim at all in 26. 3 years, you will wipe out any savings from the higher deductible.
Bingo, exactly what I was going to say

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