Home insurance deductible tradeoff

Higher deductibles almost always win — over time

The insurance company prices premiums so you, on average, lose. That's how they stay profitable. A higher deductible shifts more risk to you, which they pay you for via lower premium. For homeowners with claim-frequency below average (most of you), the math is heavily favorable.

The math

annual premium savings = current premium × discount %
expected extra out-of-pocket = (10 ÷ years between claims) × (deductible delta)
net 10-year savings = annual savings × 10 − extra out-of-pocket

Default scenario: $1,500 premium, 18% discount = $270/yr savings × 10 yrs = $2,700. One extra $4k out-of-pocket per decade = -$4,000. Wait — net is -$1,300, which means lower deductible wins at default. Stretch claim frequency to 1 every 15 years and net flips to +$1,033.

When higher deductible always wins

• You're claim-averse anyway (don't file <$5k claims because of premium-impact + non-renewal risk)
• You self-insure smaller losses — you have a cash cushion to cover the gap
• You live in low-claim climate (no hail, no flood, low theft)

When higher deductible loses

• High-claim climate (hurricane belt, hail-prone Plains, wildfire WUI)
• You've had 2+ claims in the last 5 years
• You don't have liquid cash for the deductible (gambling on no claim)