DeductibleTools

Premium vs Deductible Calculator

Weigh a premium saving against the extra exposure it buys, and see the outcome across a horizon with no claims, one claim or two.

Last reviewed

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Free · No sign-up · Runs in your browser

Every deductible decision trades a certain small saving for an uncertain larger cost. The saving is real and arrives every year; the cost is possible and arrives at a moment you did not choose.

This calculator sets the two against each other over a horizon you specify, and shows the net position in three scenarios - no claims, one claim, two claims - so the decision is made against outcomes rather than averages.

Your numbers

Results update as you type. Nothing is sent anywhere.

Result

Annual saving

$270

Break-even

3.7 years

Extra exposure per claim
$1,000
Net with no claims
$2,160
Net after one claim
$1,160
Net after two claims
$160
Claims the saving absorbs
2.16
Saving as share of premium
18.49%

This is an estimate based on the values you entered. Actual premiums, coverage, eligibility and pricing vary by provider and by individual circumstances.

The higher deductible pays for itself in 3.7 claim-free years. Choosing it only makes sense if you can pay the extra 1000 out of pocket on short notice.

How to use the premium vs deductible calculator

  1. Enter the premium and deductible for the option you have now.
  2. Enter the premium and deductible for the alternative you are considering.
  3. Set the horizon over which to evaluate the choice.
  4. Compare the three net scenarios rather than only the break-even.

What people use this for

  • Deciding whether to accept a deductible increase offered to offset a rate rise.
  • Testing how many claims the saving can absorb before it turns negative.
  • Comparing two carriers whose deductibles differ as well as their prices.
  • Setting a deductible against how long you expect to hold the policy.

Worked examples

Every figure below is produced by running this calculator against the example inputs, so the numbers always match the tool.

A clear win with rare claims

$1,460 at $500 against $1,190 at $1,500, over eight years.

Annual saving
$270
Break-even
3.7 years
Net after two claims
$160

A marginal trade

The same baseline against $1,380 at a $2,000 deductible.

Break-even
18.8 years
Net after one claim
-$860
Claims the saving absorbs
0.43

Three scenarios beat one average

Expected value is a useful summary and a poor decision aid, because nobody experiences an average. What you experience is a specific number of claims over a specific number of years.

Showing the outcome at zero, one and two claims makes the range visible. If the choice is comfortable at two claims, it is a safe choice. If it only works at zero, it is a bet rather than a decision.

How long you keep the policy matters

The saving accumulates with time, so a deductible increase that is marginal over three years can be clearly worthwhile over ten. Someone about to move house or sell a vehicle should use a shorter horizon than someone settled.

This is also why re-evaluating at each renewal is worthwhile: the horizon shortens as circumstances change, and a choice that made sense at the start of a long hold may not at the end of it.

Methodology and assumptions

What this calculator does, and what it deliberately does not do.

  • Annual saving is the difference between the two premiums. Extra risk is the difference between the two deductibles.
  • Break-even years divide extra risk by annual saving. Scenarios subtract the extra risk once or twice from the accumulated saving.
  • The tool does not predict claim frequency; the scenarios show outcomes, not probabilities.
  • All figures are estimates produced from the values you enter. This site has no rate feed and no carrier data, so it cannot quote or price a policy.
  • Nothing you type is transmitted or stored - the calculation runs entirely inside your browser.

This calculator provides an estimate based on the information you enter. Actual insurance premiums, coverage, eligibility and pricing vary by provider and individual circumstances.

This website is not an insurance company, an insurance agency or a licensed broker. It does not sell insurance, does not provide insurance quotes, and is not authorised to give advice about which policy you should buy.

No result produced here is an offer of insurance or a guarantee of coverage. Only a licensed insurer or agent, working from your verified details, can quote or bind a policy.

Frequently asked questions

Which scenario should I plan against?

The one you could absorb. If two claims over the horizon would be painful, choose the option that is still acceptable in that case.

Does a claim always cost the full deductible?

Only if the claim exceeds it. A claim smaller than the deductible pays nothing at all, which is a separate reason not to set it too high.

Should I include the chance of no claims at all?

That is the zero-claim scenario, and for most people over most horizons it is the most likely one. It is shown first for that reason.

Is this the same as the ladder calculator?

No. The ladder compares several levels to find the best step; this compares two specific options in detail across scenarios.

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