Thursday Thoughts ~ 6/24/21

Funny Math Edition

On 5/3/21, we had a hail storm. Three vehicles and the roof damaged. One vehicle already repaired, the others will keep a few dings. For some reason … that I don’t rightly remember … we took a 1K comprehensive deductible. I’m sure I thought we were saving moola. And we did but we were also banking on never needing to use the insurance.

I was of the opinion to take as high a deductible as we can afford. I even calculated the break even point by which date we’d have saved more than 1K on insurance premiums but my math was fuzzy and funny. Since our Auto Policy is a six month policy, that is more difficult for my non-math major mind to re-compute. Using my Homeowners Policy as an example, let’s see if we are better off.

I tripled checked the numbers that follow:

$15 a month x 12 months = $180 a year x 21 years = $3780 savings for taking the 5K deductible

The original deductible would have varied – 2% of the coverage A dwelling amount which equates to $3900.

Still following me? You’d better turn back because I’m lost. Hehe. Not really.

$5000 – $3900 = $1100

This means we are paying $1100 more than we would have had to pay towards our roof replacement. But, we also saved $3780. To me, we’re ahead but I can’t convince others that my money move was the brightest. And just maybe they are correct. I didn’t otherwise divert the $3780 to ‘earn’ more as I had once planned. I forgot about it actually. I also thought the difference was more than $15 a month. At the time, I knew our break even point was @ 6.2 years in … roughly. After that, it was all gravy.

Now the decision is whether or not to leave the deductible as is? Or to lower it for the next claim. Which we never hope to have btw.

As always, more to come.