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Understanding Car Insurance Deductibles
Choosing an insurance plan with a higher deductible can significantly lower your premium payments. However, there are a few factors to consider when setting your deductible.Your driving recordIf you have a clean driving record and have gone a couple of years without having any own-fault accidents, it is relatively safe to predict that you are at low risk for future accidents. This means you can benefit from having lower insurance premiums by increasing your deductible. Similarly, younger, less experienced drivers or drivers who are prone to accidents could opt for a plan with a lower deductible but higher car insurance premiums.Car ValueIf your vehicle is new, the collision and comprehensive deductibles will often consist of a small fraction of its value. This means you have more discretion when choosing the deductible. Your choice will probably be determined by other factors including affordability and claim history. However, if you have an older car, it is valued at less, meaning the ratio between the claim limit and the deductible doesn’t favor you. For example, if your vehicle is currently valued at $1,200 and the deductible is $500, this means the car insurance will only pay claims of up to $700. Additionally, insurance premiums are higher for older cars than newer ones. In such a scenario, you may have to reconsider the value of the collision and comprehensive coverage for your car
The good news is that you don’t have to figure out the right car insurance deductible by yourself. Your insurance agent or broker can help you make this decision based on your needs and record. It’s always a good idea to plan for the worst case scenario by opting for an insurance plan with a lower deductible. This will ensure that in the event of an accident, your out-of-pocket expenses are minimal and you can have your car up and running in no time. You can then look for other discounts from the car insurance company to compensate for the higher premiums.
Reasons to Get Car Insurance
Next to buying a new home, getting a car will be the biggest purchase and investment that you will ever make. Due to the size of the purchase of a car, it would be a good idea to ensure that you and your car are properly protected. There are several reasons why you should purchase car insurance.
Required By Law
One of the main reasons why you should get car insurance is that it is required by law. Due to the risk that comes with driving, most areas require that you have some level of auto insurance in order to drive a car legally. Normally, the base level of requirements by law are low and only require you to have collision and medical coverage. This will provide you with coverage in the event you are at fault in an accident or if someone is injured.
Requirements of Lender or Lessor
If you are leasing the car, or have to take out a loan to buy the car, you will likely have other auto insurance requirements as well. These parties are concerned that the car is covered entirely during the term of the loan or lease. Because of this, they will likely require you to have comprehensive coverage as well. This type of coverage will provide you with coverage in the event that you are involved in an accident with someone that doesn’t have insurance or the car is vandalized or stolen.