Why A Low Deductible Can Cost A Driver Money
There are several important things to think about when making decisions regarding your car insurance policy. Some form of car insurance coverage is required in each state for drivers to have on their vehicle. Tickets and fines can come from driving a car without insurance. Insurance coverage can mean a variety of levels of protection that each have their own benefits. There are a few things that all auto insurance policies have in common including the limits on liability and liability coverage. Another thing that car insurance policies have in common is the deductible. Insurance companies give you the option for a low deductible on your policy. Setting the amount of your auto insurance deductible can have a bigger impact on your monthly premiums than some might think.
Your deductible can impact your monthly premium prices because it is seen as a level of commitment on your part with the insurance company. A deductible is a preset amount that you declare that you are willing to pay before making a claim on your policy. The deductible is up to you to pick because some drivers may not be able to afford a lot of money. If you set a low deductible the insurance company will be on the hook for more expenses than if you had a higher amount set. If you were to get into a minor accident that only cost a few hundred dollars in damage and your deductible was above that amount, the insurance company would not have to get involved in the process at all.
When you have a significant accident your deductible helps the insurance companies pay for the damages that came from the collision. If you have a higher auto insurance deductible then that the insurance has a decreased liability. They can pass the savings on to you when you make your monthly payments. Insurance companies bill based on risk and liability. If you are a higher risk and have a low deductible then your bill can increase significantly. If you demonstrate your willingness to help out with the costs involved in an accident, the insurance companies give you the benefit of lower payments.
Setting your deductible is a big part of signing up for your auto insurance policy. For detailed information on how much more you will spend per month with a low deductible, contact your insurance agent. Keep in mind that the higher the deductible is the lower your monthly premium will be. You can find insurance quotes online that will compare different companies for you with the same information. This helps you see how your deductible will impact your bill on different companies instead of just on an existing policy.