August 28, 2011

Knowing When A High Deductible Is A Better Financial Choice

A car insurance policy with a high deductible might seem like a risky purchase. In many ways, it is – a car insurance deductible is the amount of money that a driver must pay out of pocket before an insurance company covers any of a car insurance claim, and a high deductible means more of a loss for a driver if a serious car insurance claim is ever submitted. However, a high deductible also means lower car insurance premiums, and in some cases, high deductible policies may actually offer a better value than some low deductible policies.

High risk drivers stand the best chance of benefiting from high deductible policies, because their car insurance rates may be affected the most by different deductibles. Car insurance companies assume that high risk drivers have a greater chance of being involved in an accident, so there's a bigger difference between the premiums of high and low deductible policies for these individuals. In some cases, low deductible policies could cost a significant amount of extra money per month for high risk drivers, and when this is the case, they're rarely worth the extra investment. Drivers might also benefit from high deductible policies if they don't spend much time on the road, as their chances of a car insurance claim are lower.

Another group of drivers who can benefit from high deductible policies are drivers who have extremely expensive vehicles. Even with a high deductible, a major claim on an expensive vehicle can still yield a serious payout, and by raising deductibles, these drivers can often pay much less for their car insurance policies. Drivers with sports cars and other high risk vehicles often pay hundreds of dollars less per year by opting for high deductible policies.

However, it's important to note that there are ways to decrease the cost of an auto insurance policy other than by changing the car insurance deductible. Drivers should consider looking into car insurance discount programs before changing their deductibles. It can also be helpful to shop for quotes online, as this often yields better than average rates for safe drivers. However, high-deductible policies may mean a better value for certain types of drivers, and they're worthy of consideration. Drivers should calculate the difference in premiums between high deductible, low deductible and average deductible policies over the course of a year and opt for a high deductible policy if the difference in premiums is significant enough to offset the deductible in a serious claim. This can be a great way to save money, especially for drivers who don't spend a lot of time on the road.