The Auto Deductible Debate:
$1,000 vs. $500
Everyone's looking for ways to reduce auto insurance rates. But there are some strategies some drivers have overlooked.
For instance, one of the best ways to save a bundle on auto insurance is incredibly simple: raise your deductible. Increasing your deductible just a few hundred dollars can lead to major savings on your auto insurance premium.
What's a Deductible Anyway?
A deductible is the amount you must pay before your insurance policy covers any costs associated with an accident. For example, if your deductible is $500 and you're involved in an accident that causes $1,500 worth of damage, you are required to pay $500 before your insurance company will cover the remaining $1,000.
Whether it's $100, $250, $500, or $1,000, all auto insurance policies carry some form of deductible.
Looking for a Lower Premium? Raise Your Deductible!
If you're willing to raise your deductible, it could save you a bundle. According to Edmunds.com, increasing your deductible from $500 to $1,000 could save you as much as 15% on your auto insurance premium. Assuming you pay $700 annually for auto insurance, you would stand to save over $100 per year.
Even better, if your deductible is $250, raising it to $1,000 can save between 25 and 40% on your premium! You will incur higher out-of-pocket costs should you need to file a claim, but the amount you'll save on your premium may be well worth the risk.
Striking a Balance
Deciding what amount you are willing to pay and how often you anticipate filing insurance claims will help you settle on a deductible amount that is right for you.
If your bank account could withstand a $1,000 deductible, it might be beneficial to raise your deductible and keep your premium low. But if a $1,000 deductible would cripple your finances, you may want to play it safe and keep your deductible at an affordable amount.
Shopping Around Saves Money
Choosing the first auto insurance policy that pops up may be the fastest way to shop, but it's far from the best. Comparing quotes from multiple companies is the best way to make sure you find the most affordable rate. At InsuranceRates.com in just 8 minutes you can compare auto insurance rates from top companies.