January 26, 2012

How To Choose An Auto Insurance Deductible For A New Car

Buying a new car is a great feeling. When the car is purchased, insurance is one of those necessary requirements to keep it legal on the streets. To avoid spending too much on auto insurance, it's important to consider a car insurance deductible. There's a fine balance between choosing the right deductible and keeping overall insurance affordable throughout the year.

The idea behind a car insurance deductible is that it is what the auto insurance companies require their policyholders to pay before they start paying any money towards the actual repairs when an accident occurs. The more a person is willing to pay out of pocket for the car, the less money the insurance company will charge for a monthly premium.

A new car is going to be a little more expensive to insure usually because the overall price of the car is more money. Insurance companies know that it will cost them more money to replace the car if it is totaled, which is why they need to protect their interests. Protecting personal interests is also important, however, which is why the deductible should be chosen carefully.

A very high deductible can be a way to keep the cost of auto insurance low. If a driver has a very strong driving record with minimal to no accidents, there's a strong possibility of never being involved in an accident to begin with. This means that a person wouldn't have to shell out any money out of pocket throughout the duration of the policy.

If, however, a person has a poor driving record and accidents are common, it may be better to go with a low deductible and take the hit on a slightly higher monthly premium. This is where the balance must be struck between the monthly premiums and the out of pocket expenses to look at the overall picture of what the cost of auto insurance will be throughout the year.

If a person has to pay the deductible several times a year because of accidents as well as the monthly premium, insurance can get very expensive. As a result, it's necessary to look at past driving history to determine the potential for these kinds of costs and break it down to see what the best possible scenario is.

From there, once the deductible is chosen, a driver can turn to the Internet to do some comparison shopping among companies. A new car can be more expensive to insure but that doesn't mean that a policyholder has to pay astronomical rates, either. It is often tempting to lower the monthly rates by increasing the deductibles, but is important to consider the consequences.