Benefits of Increasing Car Insurance Deductibles

Last Updated on March 22, 2018 by Jason Mason

Why would increasing your car insurance deductible be beneficial? Isn’t it going to cost you more when you become liable for damages? As surprising as it may sound, there really are benefits—for economical and practical reasons.

Lowers the premium

Increasing your car insurance deductible will lower your premium rates. Why would the insurance company do that? They are more than willing to do this because in the event of an accident or damage that you may incur, they will have less amount to be liable for because you agreed to a higher insurance deductible.


For example: You agreed to a $1,000 car insurance deductible. If you incur $1,500 repair damage, the insurance company will only have to pay $500. You are not at a disadvantage here. Accidents do not incur in a monthly or weekly basis, and if you are a careful driver, sometimes it would seem that paying for insurance is a waste of money. But since it is mandated by law and it is for contingency purposes not only for your benefit but for the benefit of the potential people you may be liable to, paying for insurance cannot be avoided.

A suggestive solution

To remedy this seemingly irreconcilable problem of paying for a higher premium or assuming a lower insurance deductible, the solution to saving money when it comes to trying to save money by shelling out less money for premiums is assuming a higher insurance deductible. If an unforeseen event like an accident does not occur, then you do not assume to pay anything out of your agreed car insurance deductible. Plus, you get to pay a lower amount of premium.

Opportunity Cost

In economics, opportunity cost in layman’s terms is spending money for a commodity and in effect losing money that could have been spent for something else.

Money for other things!

When you spend money for a higher premium, you are missing out on other things that could have been bought with the money you spent on paying for a higher premium. You could have spent it on groceries, a dinner for two at a nice restaurant, or an addition to your savings for a trip abroad. If you pay for a lower premium, you get to keep the money saved for the things mentioned above. This is one of the perks of agreeing to a higher car insurance deductible. At least you can put the “extra” money saved to good use.