September 2, 2011

How Low Car Insurance Deductibles Can Still Be Costly

Low car insurance deductibles appeal to consumers because they mean lower out-of-pocket expenses in the event of a claim. However, low deductibles come with higher annual premiums. The deductible you select has a large effect on your annual insurance costs. Picking an auto insurance policy that gives you the least costly deductibles and premiums is an art in itself. Selecting the right deductible can lower insurance costs and result in a greater net savings year after year. Seeking an insurance quote is the best way to compare rates and avoid costly deductibles. Deductibles don't only affect what the policyholder pays after a claim. They have a significant affect on premiums. Many policyholders don't realize the hidden costs of a low-deductible plan because they haven't compared the cost of low, average and high-deductible policies.

Comparison shopping is an essential step when selecting a low car insurance deductible. Several factors make low car insurance deductibles even more expensive for a select group of drivers. In the long run, higher deductible plans are more affordable if you are a high-risk driver, if you need to insure an expensive vehicle or if you drive a lot in high risk areas. Two-door sports cars are involved in a larger number of accidents, so low deductible plans are even more expensive for these models. Factors that affect your base insurance rates will also affect the premiums associated with your deductible. If you spend a lot of time driving, your premium will be higher than someone whose car sits in the garage most of the week. Drivers experiencing higher than average rates from any of these compounding factors are often better off purchasing a high deductible plan. Those who don't drive a lot may not notice such a radical price difference between high and low deductible car insurance policies.

To know if you're really getting a good deal, compare the cost of a high deductible and low deductible policy. If the annual savings of switching to a plan with a $500 deductible is more than $400 less than the cost of a $100 deductible, you could save more over the long term. Generally, experts recommend selecting the highest deductible your budget allows. If you are unable to cover the cost of your deductible, it can be nearly impossible to get your car repaired, which means more out-of-pocket expenses plus the inconvenience of arranging alternate transportation. Selecting the right deductible for your unique situation requires careful consideration and factual comparisons of rates, which are affected by where you live, where you drive and how much it costs to have your vehicle repaired.