Increasing or decreasing your deductibles is a way of tweaking your total insurance costs. This article will show you what deductibles are, how they work and how you can use them towards your advantage.
A deductible is the amount you agree to pay upfront if you file a claim on a collision or comprehensive policy. The insurer will, afterwards, provide the difference, if any. Here are two examples of how deductibles work:
undefinedThe higher the deductible, the lower your premium will be, because the insurer will pay you less in settlements in the event of a claim.
How much can you afford to spend in case of an accident? You should have this money available at all times, because you can never know when an accident occurs. Insurers impose a minimum deductible in the range of $250, but it can be as high as you want. Don’t set the deductible to an outrageously high amount just to get a lower premium though – if you will have to get a second job or max out your credit cards it will only be a false economy.
With the costs of medical treatment going up each year and property values constantly increasing, it goes without saying that you cannot expect an auto accident to be cheaper in the near future.
Minor accidents should be dealt off as soon as possible. Fender benders or minor scratches can wear off the paint, and those impacted areas may rust. What could have been a quick $50 fix can turn into a major repair within a year.
It may sound as a cliché, but it does pay up to be a safe driver. Next to the deductibles you won’t have to pay out of your pocket, you will be eligible for no-claims bonuses that can get as high as close to half the value of a policy.
It can be fairly stressful and tricky to figure out the deductible to set. Ask yourself these questions: