Any insurance plans for high-deductible, low premiums?

On Sunday, January 18, 2015 at 9:36:08 PM UTC-5, wrote:
The goal was to trade $3-4K deductible for reduced premiums. At $50K damage, he's still only out $4K ($66K settlement), which meets the goal. I'm aware of the salvage process having bid on one, but I can't see how that affects the math. In any total the ins co gets the wreck (as planned). I'm only a math guy so in the end I defer to your wisdom.

Rereading this, I realized didn't reply carefully enough, because (to a certain extent) your table didn't make sense. The table doesn't really tell a story, because it's not answering the question. The real question is (or should) be: what is the total cost (premiums paid + deductible + underinsured amount) to the owner under various loss scenarios? What you'd need is a grid that shows a mix of premiums and deductibles both at full value and at the amount of underinsurance and showing various non-totaled and totaled scenarios. Oh, and you'd need to show this over time (e.g. one year horizon, two year horizon, etc.)

The answer will tend to be that the savings in premiums is probably not worth it for anything other than radically underinsuring, in which case the risk exposure risk is significantly higher. As mentioned elsewhere, the rating tables are not linear from dollar zero of hull value. As an example, I recently upgraded gliders with a new glider worth slightly more than double the old one. The increase in premium was less than 50%. In dollar figures, it was a little less than $10/$1000 increase in hull value.

Your exact rating depends on a number of factors related to pilot experience and ratings, loss history, etc. but in the example above trying to back into a "high deductible" by underinsuring by say $5K would be a really dumb move.