Estimator Inputs
Example Data Table
| Driver profile | Current annual cost | Alternative annual cost | Net year‑1 savings | Notes |
|---|---|---|---|---|
| Urban commuter, standard limits | $1,420.00 | $1,180.00 | $165.00 | Includes $75 switching fee and 10% claim probability. |
| Low‑mileage driver, higher deductible | $1,110.00 | $980.00 | $92.00 | Higher deductible reduces premium, raises expected out‑of‑pocket. |
| Bundled policy with telematics discount | $1,560.00 | $1,210.00 | $275.00 | Discount stacking capped to avoid unrealistic totals. |
| Premium limits with extra add‑ons | $1,980.00 | $1,840.00 | $45.00 | Normalized premium helps compare richer coverage tiers. |
| Older vehicle, minimal extras | $920.00 | $860.00 | $60.00 | Small savings may not justify switching friction. |
Formula Used
Discount rate (capped): discountRate = min(45%, safe% + bundle% + pay% + tele%)
Premium after discounts: premiumNet = premium × (1 − discountRate) + addOns + fees
Expected deductible cost: expectedDeductible = claimProbability × deductible (claimProbability as a decimal)
Expected annual cost: expectedAnnual = premiumNet + expectedDeductible
Year‑1 alternative cost: newYear1 = expectedAnnualNew + switchingFee
Net savings over N years: net = currentExpected × N − (newExpected × N + switchingFee)
How to Use This Calculator
- Enter your current annual premium and deductible from your policy documents.
- Enter the alternative quote premium and deductible you want to evaluate.
- Add expected discounts and optional policy fees for both options.
- Select any add-ons you plan to keep or add in each option.
- Set a reasonable annual claim probability and any switching fee.
- Press Estimate Savings to view results above the form.
- Use Download CSV or Download PDF to save your report.
Inputs mapped to expected annual cost
This calculator converts premiums into an expected annual cost so you can compare policies fairly with confidence. It starts with each option’s annual premium, applies your discount entries, and adds fixed add‑ons plus any policy fees. Next, it estimates deductible spending by multiplying annual claim probability by the deductible. Adding net premium and expected deductible yields an expected annual cost used for savings and multi‑year totals.
Discount levers and cap rationale
Four discount levers are modeled: safe‑driver, bundling, pay‑in‑full, and telematics. Underwriting avoids unlimited stacking, so the combined discount is capped at 45% to keep results realistic. Example: 10% safe‑driver, 5% bundle, 3% pay‑in‑full, and 2% telematics equals 20% total, reducing a $1,200 premium to $960 before add‑ons and fees.
Deductible risk modeling with probabilities
Deductible decisions shift cost between certain premiums and uncertain out‑of‑pocket payments. Expected deductible equals claim probability (as a decimal) multiplied by the deductible. If probability is 12% and the deductible is $750, expected deductible is $90 per year. Comparing this figure across options highlights when a lower premium is offset by higher expected deductible exposure.
Switching fee, payback, and decision timing
Year‑1 savings include a one‑time switching fee to reflect cancellation charges, deposits, or broker costs. Break‑even months estimate how long ongoing savings must persist to recover that fee. If the fee is $150 and ongoing savings are $300 per year, break‑even is about 6.0 months. If ongoing savings are negative, the model flags that recovery is unlikely.
Multi‑year horizon and normalized comparison
Net savings over N years equals current expected cost times N minus alternative expected cost times N, minus the switching fee once. A normalized premium indicator also appears, scaling net premium by coverage tier and liability limits to signal differences in protection. Use normalized figures to compare value when one option seems cheaper due to leaner coverage choices.
FAQs
Q1: Does this estimator replace a formal quote?
A: No. It estimates expected annual cost from your inputs. Use it to compare scenarios, then verify premium, fees, and coverage terms with the insurer before switching.
Q2: Why does the model use claim probability?
A: Claim probability converts deductibles into an expected cost. A higher probability increases expected out‑of‑pocket spending, which can offset a lower premium when deductibles rise.
Q3: How should I pick a switching fee?
A: Include cancellation penalties, down payments, broker charges, and any required upfront fees. If you are unsure, enter a conservative amount so the break‑even estimate is not overstated.
Q4: Are add‑on costs accurate for every insurer?
A: Add‑ons are modeled as typical fixed annual costs for comparison. If your quote lists different add‑on prices, adjust premiums or fees so totals match your documents.
Q5: What does normalized premium tell me?
A: It adjusts net premium for selected coverage tier and liability limits. If normalized costs differ less than raw costs, the cheaper option may simply have lower protection.
Q6: Can I share results with others?
A: Yes. After calculating, export CSV or PDF. The files include key inputs, expected annual costs, savings metrics, and notes so others can review assumptions quickly.