One of the most important decisions you make when selecting a car insurance coverage policy is the level of deductible your policy will include. The deductible is the amount you will pay, from your own funds, if your vehicle is in an accident, or otherwise damaged or stolen. You are responsible for paying the costs up to the deductible level you specify and your car insurance policy pays the remainder of the total cost. A car insurance policy with a higher deductible will always result in cheaper car insurance.
It is important to consider your personal financial situation when considering your deductible range. A higher deductible will save you money on your car insurance premium. However, unless you are able to cover the deductible when you have an insurance claim the insurance payment will not cover the total cost of the repair and you will end up without a vehicle or driving a damaged vehicle until you can come up with your share of the repair bill. Setting your deductible too high for your personal financial situation may be something to consider carefully.
You can specify one level of deductible for your comprehensive coverage and another for your collision coverage. Comprehensive car insurance coverage includes damage caused to your vehicle by anything other than an accident with another vehicle. For example damage from acts of nature, vandalism, or theft. Collision car insurance coverage pays for the damage caused by an accident with another vehicle. Deductibles usually range between $250 and $1500.
Choosing a car insurance deductible of $1000 instead of $500 will often drop your cost for car insurance by as much as 25 while only costing you an additional $500 in the event your vehicle is damaged. You need to do the math. If you pay $2400 annually for your car insurance with a $500 deductible and raising that deductible to $1000 generated a 25 savings in your annual car insurance cost that would amount to $600 annual savings to you if you made no claims. If you had to make a claim the higher deductible would cost you an additional $500 (above your original $500 deductible) out of pocket expense to you still resulting in a $100 savings.
The more risk you assume the lower the premium. The critical element to raising your deductible is to make sure you have cash equal to your deductible tucked away to cover your share of the repairs if need be.
Many car insurance companies and “free car insurance quote” websites have deductible calculators to help you make an informed decision as to what level of deductible works best in your situation. Remember even if you are not changing car insurance companies you can change your current car insurance policy deduction level by calling your agent and requesting a change.
Do some comparison shopping before purchasing a car insurance policy and determining your deductible level. Compare several car insurance company quotes at a couple of deduction levels. The internet “free car insurance quote” websites make this process quite painless.
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