By: Ajay kumar Medagani October. 18, 2018

In a recent study, Gavop analyzed the net savings from home insurance plans with higher and lower deductibles in Carmel, Indiana,against a hypothetical claim amount. The higher deductible value was assumed to be $2,500 and the lower value was $500. The analysis showed that for an insurance claim of $700, homeowners save only $20 in total yearly spending by investing in the lower deductible insurance plan compared to one with a high deductible. In the lower deductible plan, the median yearly premium paid is $1,310, and the total yearly expenditure is $1,810. For the higher deductible plan, the median yearly premium and expenditure are $1,090 and $1,790, respectively.

Carmel, with an estimated population of about 93,000 people (according to the US Census Bureau, 2017), is located in Hamilton County, in the U.S. state of Indiana. In the state, for an insurance claim of $500, the yearly expenditures are lower for plans with a deductible of $2,500 than those for plans with a deductible of $500 - by a margin of $90. The statewide median insurance premiums for a $500 deductible plan is $490, and the total yearly expenditure is $990. For a $2,500 plan, these amounts are $400 and $900.

The Gavop study also analyzed 10 locations within a 50-mile radius of Carmel to compare the savings for homeowners in insurance premiums. For a hypothetical claim amount of $1,500 in Michigan town, the net savings in yearly expenditures for the low deductible plans is $950. Here, homeowners pay a median yearly premium of $390 and incur a total yearly expenditure of $890 for a $500 deductible plan. In the higher deductible plan of $2,500, they pay a median yearly premium of $840 and a total yearly amount of $1,840.

For the same claim amount of $1,500 in Baker, however, residents see a net savings of $910 in choosing the lower deductible plan. The median premium and total yearly amount paid for a $500 deductible are $580 and $1,080, respectively. For a $2,500 deductible, the median yearly premium is $490, and the total yearly expenditure is $1,990. The following graph illustrates this graphically.

The table below calculates the net savings from home insurance for the two deductible plans against hypothetical claim amounts for 10 locations within a 50-mile radius of Carmel. It also calculates the average yearly premium and the total yearly cost of insurance for the same locations.

		Low Deductible ($500)		High Deductible ($2,500)
Place	Example Claim Amount	Yearly Premium	Total Yearly Cost	Yearly Premium	Total Yearly Cost	Net Savings for High Deductible Plans
Indiana	$500	$490	$990	$400	$900	$90
Hamilton County, IN	$2,000	$820	$1,320	$670	$2,670	-$1,350
Carmel, IN	$700	$1,310	$1,810	$1,090	$1,790	$20
Delaware, IN	$200	$750	$950	$660	$860	$90
Michigantown, IN	$1,500	$390	$890	$340	$1,840	-$950
Baker, IN	$1,500	$580	$1,080	$490	$1,990	-$910
Lapel, IN	$1,000	$510	$1,010	$420	$1,420	-$410
Hendricks County, IN	$700	$760	$1,260	$620	$1,320	-$60
Fillmore, IN	$700	$320	$820	$260	$960	-$140
Sugar Creek, IN	$500	$840	$1,340	$710	$1,210	$130
Nineveh, IN	$200	$540	$740	$430	$630	$110
Brandywine, IN	$100	$820	$920	$690	$790	$130
Point Isabel, IN	$100	$520	$620	$430	$530	$90

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