A standard policy comes with a set car insurance deductibles. Motorists can ask to increase or decrease them. Increasing would be possible with most companies but some may not allow you to go down below what they determined. Then, you may need to find another company. There are companies which offer policies without any or decreasing deductibles for every year that you don’t have claims.
Premiums charged would go up or down depending on your selected amount of deductibles. Increasing them would mean that you take higher responsibility when you have a claim. This is a good indication that such policyholders wouldn’t be keen to make a claim. Therefore, insurers are happy to offer good savings. When you agree to pay higher share of claims in the future you will be paying lower premiums now, in most cases.
What Is Car Insurance Deductible?
Deductible is the amount a policyholder contributes in case of a claim. This amount must be paid before the insurer pays or it may be deducted from the final settlement. Let’s say the damages are $10,000 after a crash and collision deductible is $500. This means that policyholder will have to come up with $500 because the insurance company will only pay $9,500.
It appears that about fifty percent of motorists look at the level of vehicle insurance deductibles before choosing a policy. If you keep it low you will be paying less when you have a claim. However, you may be able to find a middle ground by keeping the deductible reasonable and car insurance rates low. When used right it is a powerful tool to have a saying on the premiums charged.
Is Higher or Lower Deductible Car Insurance Better?
Policies are sold with varying deductibles for Collision and Comprehensive Coverage. It can be as high as $1,000 but hardly ever zero. On the outset the policy with lower deductible may look better. However, you need to add the rates charged to the equation. Then, you can determine the right amount to be accepted or insisted in some cases.
Depending on the company an increase from $200 to $1,000 in the amount you are willing to pay in case of accidents can save you as much as twenty percent now on premiums. As usual, no two auto insurers are the same when it comes to setting quotes. Therefore, it is always beneficial to shop around. This is particularly true when you are willing to play around with the coverage depending on the savings and you like to get them now.
If you have no claim in the next year you will be fully benefiting from savings achieved. Once the amount increased the downside is when you have a claim. Deductible is charged for each and every claim. So, when you have several claims and the amount you have to cover is $1,000 each time this could become a problem.
Policyholders will need to assess their individual circumstances very carefully. The first point to consider is how much savings you have in the bank because accidents can happen any time. If you have a tight budget and hardly any savings it may not be in your best interest to push up the deductibles even you save some money now.
What Should my Deductible Be for Car Insurance?
Again how much deductible for auto insurance you should have depends on personal view and circumstances. For example, after one accident your premium can be doubled. If you believe it was down to bad luck and you are a good driver who is unlikely to have another accident the situation can be different. The pendulum may swing in your favor when you get savings more than the increased risk taken.
Policyholders’ view point is highly important in coming to a decision. Some motorists have already made their mind that they will not make claims and increase their auto insurance rates unless the damages are high. This is a good way of keeping the driving history clean and qualifying for the largest good driver discounts. For example, if you believe that you are better served not to make any claims for damages under $1,000 and pay them out of the pocket it is sensible to set the deductible at that amount.
As the examples show there is no one way of deciding how much they should be set at. You need to do your own math and come to a figure you are happy to accept.