What insurance deductible should you choose?

A deductible is an important component of most types of insurance.  Most often, a policyholder has deductible options from $0 to $5,000 or more.  Keep in mind, the lower the deductible, the higher the premium charged by the insurance company.  After all, the insurance company has more risk if the deductible is lower.  The more risk the policyholder assumes (a higher deductible) the lower the premium charged by the insurance company.

As a general rule, it's best for policyholders to take-on higher deductibles.  For a homeowner policy, a minimum deductible of $1,000 is a good idea.  Better yet, take the next highest level or $2,500.  For personal auto insurance, consider a minimum of a $500 comprehensive deductible and $500 collision deductible (or better yet $1,000 collision deductible).  The same concept applies...  The lower the deductible the higher the premium.  

Finally, if we purchase a higher deductible, we are less likely to report a claim to the insurance company.  Avoiding reporting claims translates to lower premiums to the policyholder.

The purpose of insurance is to pay for large losses/claims.  The type of loss the policyholder simply could not afford to pay out-of-pocket.