"I've had a thousand-dollar deductible for twenty years," my dad said at Sunday dinner, passing the green beans. We were talking about car insurance because I brought it up, because lately I bring everything up at Sunday dinner. Dad drives a propane truck all over the county and has an opinion on every bill anyone pays.
His point was that we were paying every month to protect ourselves from a $500 bill. Our rent went up $35 this month and January's electric bill came in at $246, so I was in the mood to find money anywhere. That week, we ran the numbers.
First, what we're talking about. On our car policy, collision covers damage to our own vehicles when we hit something: another car, a pole, the ditch. The deductible is the amount we pay first on each claim before the insurance pays the rest. With a $500 deductible and $3,000 of damage, we pay $500 and the insurer pays $2,500. With a $1,000 deductible, we'd pay $1,000 and they'd pay $2,000.
Comprehensive is the other half. It covers things like hail, theft, a falling limb and, around here, deer. It has its own deductible, and I'll get to why ours is staying put.
The math
I called our agent and asked what it would save to move our collision deductible from $500 to $1,000 on both vehicles.
| Per month | Per year | |
|---|---|---|
| Savings on the CR-V | $7 | $84 |
| Savings on the Silverado | $9 | $108 |
| Total savings | $16 | $192 |
| Extra we'd pay on a collision claim | $500 |
So we'd save $192 a year, and in exchange we'd pay an extra $500 any time we have a collision claim. Divide $500 by $192 and you get about 2.6. If we go two years and seven months without a collision claim, we've broken even. Every claim-free year after that is $192 we keep.
Our history helped. Neither of us has ever filed a collision claim. The closest I've come was backing my old car into a pole at the Walmart in town in 2019, and I paid the $380 myself, because it was under the deductible anyway. Dad pointed out that a lot of small dings go that way. People pay for a low deductible and then never use it on the little stuff.
The change starts March 1. Our car insurance goes from $129 a month to about $113, and the $16 goes to the house fund.
Why it only works with money set aside
Here's the part I want to be honest about. A $1,000 deductible only saves money if you can actually pay $1,000 the day you need it. If we couldn't, a fender bender would turn into a credit card balance, and the interest would eat years of savings in a few months. We spent ten weeks last spring paying off a credit card. I'm not going back over a parking lot.
We have $3,000 in our emergency fund, in its own account, apart from the house fund. A $1,000 deductible would take a third of it and leave $2,000 for anything else. We wrote one rule in the sheet: a deductible comes out of the emergency fund, never the house fund, and we refill the emergency fund before we add anything new to the house fund.
If we didn't have that $3,000, I'd keep the $500 deductible and not think twice. Saving $16 a month doesn't help if the bill you're betting against would knock you flat. I'd ask your agent for the numbers on your own policy, then look at what's in your savings before you decide.
Why comprehensive stayed at $500
We left our comprehensive deductible at $500 on purpose. Tyler hit a deer north of town in 2020 on the way to his mom's in Kirksville, and the grille and headlight came to $2,300. That was a comprehensive claim, not collision. Deer and hail are the claims we're most likely to have in northeast Missouri, and they're mostly out of our control. Raising that deductible would have saved a few more dollars, but it would raise our cost on the claims we're most likely to file. Collision, at least, depends a lot on how we drive.
Dad was right, which I told him, which he enjoyed more than the pie.
