Professional services
Insurance Deductible Calculator
Compares deductible choices, where the question is what you could absorb rather than what saves most.
Result
An estimating tool, not insurance advice and not a quote. Actual premiums are set by underwriting on factors no calculator sees: claims history, credit and loss data, exact location, construction, contract requirements and the insurer's own appetite. What cover you need is a question for a licensed broker who has looked at your situation. The arithmetic ignores the thing that actually matters: whether you can pay the higher deductible on the day of a claim without borrowing. A deductible you cannot afford is not a saving, it is a risk transferred back to yourself at the worst moment. Claim frequency also rises with a higher deductible only because small claims stop being worth filing.
Get a Free Business AuditHow the calculation works
The premium at each deductible against the out-of-pocket amount it carries, with the break-even claim frequency that makes one choice better than the other. Raising a deductible always lowers the premium; whether it is a good trade depends on claim frequency and on whether the larger amount could actually be paid.
What moves the number
- Premium saving at each deductible level.
- Expected claim frequency.
- Whether the deductible is affordable at short notice.
- Whether separate percentage deductibles apply to some perils.
Where this one goes wrong
A deductible chosen purely to minimise premium converts an insurance problem into a cash flow problem, and the test is whether the amount could be paid at short notice, twice in a year if necessary, without difficulty. Percentage deductibles for wind, hail or earthquake are the other thing to check, since they are calculated on the insured value rather than being a flat sum and can be far larger than the standard deductible on exactly the claims most likely to arise.
Before you quote
- Choose a deductible you could pay twice in a year without difficulty.
- Check for separate percentage deductibles on specific perils.
- Compare the saving against the added exposure, not in isolation.
Questions
About this calculator
Should I take the highest deductible?
Only if you could pay it at short notice, twice in a year if necessary, without difficulty. Chosen purely to minimise premium it converts an insurance problem into a cash flow one, which is a poor trade at the moment it matters.
How do I know if a higher deductible pays?
Compare the annual premium saving against the additional exposure and your expected claim frequency. If the saving takes many years to cover one extra deductible, the question becomes whether you would rather hold that risk or pay to transfer it.
What is a percentage deductible?
One calculated as a share of the insured value rather than a flat sum, commonly applied to wind, hail or earthquake. It can be far larger than the standard deductible and applies to exactly the losses most likely in the regions where it is used.
The formula
net = premium saving over ten years - extra deductible x expected claims
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How to use this calculator
- Current deductible ($). Enter your own figure; the page starts at $1,000.
- Proposed deductible ($). Enter your own figure; the page starts at $2,500.
- Current annual premium ($). Enter your own figure; the page starts at $2,400.
- Premium at the higher deductible ($). Enter your own figure; the page starts at $1,980.
- Claims you expect per decade. Enter your own figure; the page starts at 1.5.
The result updates as you type, so you can try a figure, see what it does to net benefit over ten years, and change it back. Nothing you enter is sent anywhere or saved.
A worked example
These are the figures the calculator opens with. Every number in the results column below is produced by the same calculation the page runs, so you can follow it through before putting your own figures in.
What goes in
| Input | Value |
|---|---|
| Current deductible | $1,000 |
| Proposed deductible | $2,500 |
| Current annual premium | $2,400 |
| Premium at the higher deductible | $1,980 |
| Claims you expect per decade | 1.5 |
What comes out
| Result | Value |
|---|---|
| Net benefit over ten years main result | $1,950 |
| Annual premium saving | $420 |
| Extra you pay per claim | $1,500 |
| Years to cover one extra claim | 3.6 |
| Claims per decade where it stops paying | 2.8 |
Raising the deductible saves $1,950 over ten years at 1.5 claims. It stops paying above 2.8 claims a decade.
How sensitive the answer is
Holding everything else steady and changing only current deductible, this is what happens to net benefit over ten years. It is worth knowing which of your inputs the answer actually hinges on, and which barely move it.
| Current deductible ($) | Net benefit over ten years |
|---|---|
| $500 | $1,200 |
| $750 | $1,575 |
| $1,000 example above | $1,950 |
| $1,500 | $2,700 |
| $2,000 | $3,450 |
Every other input is held at the example value while this one changes, which is not how a real job behaves. Treat it as a guide to which number matters most, not as five separate quotes.
What each figure means
- Current deductible ($)
- A money amount, starting at $1,000.
- Proposed deductible ($)
- A money amount, starting at $2,500.
- Current annual premium ($)
- A money amount, starting at $2,400.
- Premium at the higher deductible ($)
- A money amount, starting at $1,980.
- Claims you expect per decade
- A number, between 0 and 20, starting at 1.5.
What the results tell you
| Result | What it is |
|---|---|
| Net benefit over ten years | The headline result. A money figure. |
| Annual premium saving | A money figure. |
| Extra you pay per claim | A money figure. |
| Years to cover one extra claim | A decimal figure. |
| Claims per decade where it stops paying | A decimal figure. |
Keep going
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