We often buy auto insurance without understanding what we are purchasing. The excess premium that you pay can be a waste of money. Your auto insurance deductible could be too high.
Your deductible is the amount you agree to pay towards the claim. After your deductible, the auto insurance company will usually pay the balance. You can calculate the cost of your insurance by calculating the deductible. This applies to all insurance. This article will focus on auto insurance deductibles.
The deductible you choose is one of many things to consider when buying auto insurance. The deductibles can be as low as $250 or as high as $1000. Your deductible will affect the annual cost of your insurance and your premium. It is important to calculate the real cost of the deductible when you are choosing a deductible. The true cost refers to how much your premium will be affected by the deductible.
Let’s take a look at the savings you can make by increasing your auto insurance deductible. Research has shown that changing your deductible from $250 up to $500 could reduce your premiums by between 15% and 30%. You could save around 40% by moving your deductible from $500 up to $1000. However, savings must be determined on an individual basis and for each company. This raises the question of financial viability and whether it is worth increasing your deductible to save money. When you increase your deductible on auto insurance, it means that you will have to pay more money out of pocket to cover your claim.
It is easy to assess your potential cost savings. Get a quote at an auto insurance company, and then choose the coverage you desire with a $250 minimum deductible. Ask the broker or agent to give you quotes for the same coverage, with a $500 and $1000 deductibles. It is better to pay the higher premium, but keep more money in your pocket, if the difference between the premiums and the deductibles is greater than the difference. Consider this example: If you have an auto policy with $250 deductible, your annual premium is $1600. However, if the policy has a $500deductible, the annual premium will be $1250. The difference in premiums is greater than the difference in deductibles (350 vs. $250), so it may make sense to choose the lower premium with a higher deductible. You shouldn’t let insurance companies make more from you than necessary. It is smart to save money on your auto insurance, given the constantly rising cost of insurance and the rising gas prices.
This is the best thing about this plan. If you don’t have a claim in the policy period, the premiums you have paid for the lower-deductible will be refunded. You have the option to invest, save, or just have fun with the money.
Be aware that an auto insurance policy with a higher deductible means you’ll have to fork out more money in case of a claim. You must have the money, or have a means to raise it.
