Balancing Risk and Expense through Insurance Deductibles and Premiums

[Ethan Ray]

Hello,

I've been reviewing my business expenses recently and have been exploring different ways to control my monthly expenditures. One area that caught my attention is insurance, specifically the trade-off between deductibles and premiums.

In my case, I've been a homeowner for the past five years and haven't had any claims that met my $2,000 deductible during that time. I have obtained two more investment multi-family properties in those 5 years which have not had claims either. While I understand that things do happen and when it does its quite nice to have the protection, I'm contemplating whether it's worth considering a higher deductible in order to reduce my monthly premiums. By doing so, I could potentially free up some funds that could be allocated elsewhere in the business but obviously have reservations at what level of risk I put myself in by doing so.

It's important to strike a balance between managing expenses and ensuring adequate risk mitigation. How do you personally approach this dilemma? Are there any specific factors or considerations you take into account when making this decision? Have any of you opted for a higher deductible to lower your premiums? If so, how did it work out for you? Did you find it financially beneficial, or did you regret it in hindsight? Alternatively, have you chosen a lower deductible, accepting the higher monthly premiums for greater peace of mind? Have you ever benefited from that? I'm interested in learning from your insights and experiences.

Any advice, or any personal anecdotes would be very helpful.