How it works
Two insurance quotes differ in two numbers: the premium you pay whether or not you claim, and the deductible you pay when you do. Comparing them on premium alone is the mistake that costs people money, because a cheaper quote almost always hides a higher deductible. This tool puts both on one scale — expected annual cost. It takes each premium and adds the deductible weighted by how often you actually claim. If you claim once a decade, a $1,000 deductible contributes about $100 a year to your true cost; if you claim three times a decade, $300. That single adjustment makes a low-premium-high-deductible quote and a high-premium-low-deductible quote directly comparable. The break-even claims line shows the frequency at which the two quotes cost the same: claim more often than that and the lower deductible wins, claim less and the cheaper premium wins. The worst-case figures matter too — the premium plus the full deductible is the most a year can cost you under each quote, and the one whose worst case you can absorb from savings is the safer choice. This only holds when the limits and coverages are identical; a cheaper quote with lower liability limits is a different product, not a better price, so standardise coverage before comparing.
Formula
Expected cost = premium + deductible x (claims per decade / 10) | Break-even claims = premium gap / deductible gap x 10
Tips
- Standardise limits and deductibles before comparing — a cheaper quote with lower limits is a different product.
- Estimate claims honestly from your history; most people claim far less often than they fear.
- Choose the deductible your emergency fund can cover without borrowing, then compare premiums at that tier.
- Check the worst case, not just the expected case — the premium plus full deductible is what a bad year costs.
- Re-quote every renewal; carriers raise loyal-customer prices faster than new-customer prices.
Frequently asked questions
- How do I compare two insurance quotes?
- Standardise the coverage first — identical limits, deductibles and optional coverages. Then compare expected annual cost: premium plus the deductible weighted by how often you claim. A cheaper premium with a higher deductible is only a saving if you claim rarely.
- Is a lower premium with a higher deductible worth it?
- Usually, if you claim infrequently and your emergency fund can absorb the higher deductible. The break-even is the premium saving divided into the deductible increase — if that payback is under about five years and the cash is on hand, the higher deductible wins.
- How often do people actually file insurance claims?
- Auto claims run roughly one every ten years for the average driver; home claims are less frequent still. Your own history is the best guide — if you have claimed twice in five years, weight the deductible heavily; if you have never claimed, the cheap premium deserves more credit.
- Why is the same coverage priced differently by insurers?
- Each carrier prices the same risk with its own model — loss history, location, credit-based insurance score and underwriting appetite all feed different algorithms. Identical coverage for an identical driver commonly varies 20% or more between companies, which is the entire case for shopping.
- Should I pick the cheapest insurance quote?
- Only after confirming it matches on limits, deductibles and coverages, and checking the carrier's claims reputation and financial strength. The cheapest quote that pays slowly or fights legitimate claims is not the cheapest in the year you need it.