We all know you can arrange a higher deductible (USA) or excess (UK) to pay a lower insurance premium.

My question is, is there an established method to identify what is the optimal size of deductible?

  • As high as you can afford? – cbeleites Mar 21 at 0:16
  • Here is an illustration. Our company insurance has excess set at £100 and we keep £10K in emergency cash. We also have a policy of covering claims as expenses, to avoid our premiums increasing. I asked, why don't we increase the excess to £1000 and save money? And the answer was "if we have ten claims for £1000 in a year, the company's savings would be wiped out!". The justification strikes me as illogical, but I lack the knowledge to evaluate it critically. – Douglas Held Mar 21 at 11:19

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