Choosing Auto Insurance

Choosing Auto Insurance

Should You Take Higher Deductibles To Save Money?

by Gene Jones

There are various ways you can attempt to save money when buying auto insurance, including switching companies, hunting for specific discounts, and altering your coverage limits. The latter case is often the worst option because coverage limits often depend on state minimums and your assets. 

Instead of choosing one of these options, many people instead turn to another tweakable policy feature: coverage deductibles. Deductibles typically apply to collision and comprehensive coverage, although some insurers may also offer a separate glass deductible. Higher deductibles can drastically reduce premiums, but is the trade-off worthwhile?

Understanding Collision and Comprehensive Deductibles

In most states (no-fault states excluded), your insurance coverage's primary purpose is to protect other drivers. For instance, liability coverage will pay out if you cause damage to someone else's property. These policies also protect you, but in a more roundabout way, by shielding you from potential lawsuits when you're at fault for an accident.

On the other hand, optional policy features such as collision and comprehensive coverage protect your vehicle. Collision is the basic version, and it covers damage to your vehicle caused by hitting something else, whether that be another vehicle or a stationary object. Comprehensive is a broader policy covering damage from theft, natural events, etc. You'll typically need collision coverage in order to get comprehensive coverage.

Most insurers will allow you to select separate deductibles for each policy type. Your deductible is the amount you'll need to pay out of pocket for covered events. In other words, if you hit another car and have a $1000 collision deductible, you'll still need to pay for $1000 of the repairs out of pocket. Your insurer will cover the rest.

Choosing the Best Deductible

There's no question that higher deductibles are cheaper, and the differences can often be stark. However, very high deductibles can also limit the utility of these policies. Do you typically have the funds to cover a $1000 or more repair bill? If not, choosing a deductible at this level may prevent you from repairing your car following an accident or natural disaster.

You should also look at the value of your car. If your car isn't worth much, it may make sense to forego collision and comprehensive coverage altogether, especially if you can only afford a high deductible. On the other hand, these policies almost always make sense for higher-value cars, even if you need to take a much higher deductible.

Ultimately, no single answer will work for every situation, but don't treat your deductibles as an easy way to save money on your premiums. Instead, carefully consider the potential downsides of choosing a higher deductible and ensure you aren't potentially putting yourself in a situation where you'll be unable to repair or replace your vehicle after an accident.

Contact an auto insurance agent for more information. 


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Choosing Auto Insurance

When you start thinking about how to improve your car, you should look into your auto insurance policy. There are a lot of different policies on the market that are incredibly helpful, including varieties used to protect drivers, cars, and even to cover your expenses for a time after you are involved in an accident. There are thousands of different ways to select auto insurance, so think carefully about what you need to do to find the right policy for your family. By doing what you can and making the right choices, you can select auto insurance policies that will work for you.