May 8, 2010

When To Raise Your Deductible And How It Affects Your Coverage

Auto insurance coverage is based on several factors. Drivers are given many options to choose from including coverage type, maximum payout and the total deductible to be paid by the driver. All of these factors combined determine the total premium that you must pay for the current policy. Drivers are able to change the coverage options, including the amount of the deductible. It is a good idea to reexamine the current policy prior to each renewal period to ensure the proper coverage is included in the policy without any unnecessary coverage.

During the process of evaluating your current policy, examine your current situation and consider raising your deductible. When you live in a low risk area such as those with a low rate of car theft and vandalism or if the vehicle has little cash value, you may not need a low deductible. An increased deductible is the best option during seasons with good weather and safe driving conditions due to the decreased risk of weather related accidents.

You may also want to increase your deductible when your vehicle is not being used on a regular basis or when it is only driven very short distances, such as to the grocery store or to doctor’s office visits. Financial situations may also warrant the need for an increased deductible. Drivers are often able to significantly lower the total premium paid to the insurance company by increasing the deductible amounts. This can save money, particularly for low risk drivers and during low risk seasons.

Any changes made to a policy will affect your auto insurance coverage. Raising your deductible will lower the premium that must be paid to continue your coverage. While this will lower your current rates, it will cost you more in the event of an accident or other insurance claim. A higher deductible will greatly increase the amount that you must pay before the insurance company will cover any costs. As an example, a 100 dollar deductible will increase your premium, whereas a 1,000 dollar deductible will decrease your premium but the insurance coverage will not apply for anything less than the deductible amount.

Increasing your deductible has many benefits and should be considered when renewing an existing policy based on individual needs and circumstances. Before making changes, it must be decided whether you want to pay more for coverage that may or may not be needed, or if you want to pay more later on in the event of an accident. The best time to raise your deductible is during periods of low risk weather and is not recommended during periods of bad weather or in high risk areas.