A simple, numbers-first way to decide between deductible options for property, auto and other P&C policies.
A higher deductible lowers the premium every year and raises the cost of every claim. Whether that is a good deal depends on how often you have claims and whether you can afford the deductible when one happens.
Divide the extra deductible by the annual premium savings. If a $5,000 deductible saves $800 a year compared with a $1,000 deductible, the extra $4,000 of risk is paid for after five claim-free years.
If you typically go longer than that between claims, the higher deductible wins.
Multiply your expected claims per year by the deductible and add the premium. The option with the lowest expected annual cost is the best value on average.
Never choose a deductible you could not pay tomorrow. For businesses, consider how a deductible would interact with several small losses in one year.