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.