August 16, 2011

When A High Auto Insurance Deductible Is A Good Choice

Choosing deductibles is an important part of buying a good car insurance policy. A deductible is the amount of money that a driver must pay towards a claim before a car insurance company issues a check. For instance, if the driver submits a $2000 claim with a $500 deductible, the driver will get a check for $1500 if the claim is approved. The lower the deductible, the lower the risk for the driver. The right auto insurance deductible can make an enormous difference in a claim, but contrary to popular belief, a low car insurance deductible isn't always the best choice.

A high auto insurance deductible may be the right choice for some drivers, as the difference in premiums between a policy with a high deductible and a policy with a low deductible can be extreme in some circumstances. The best method for choosing deductibles is to do a few quick calculations to find the total cost of different deductible options and to weigh this against the costs that a driver would encounter when making a claim. For instance, a driver might find that the difference in monthly premiums between a high and a low deductible policy would be about $40 per month, which would be a difference of nearly $500 per year. If the driver's vehicle is worth less than $1000, the high deductible might be a good buy, as it's unlikely that the low deductible will be worthwhile unless a claim is made within the first few months of the car insurance policy. Policy holders who don't drive very often or who drive very short distances in safe neighborhoods might decide that the chances of a serious claim are low and a high deductible policy would be a reasonable purchase.

However, a high auto insurance deductible would not be worthwhile if the vehicle is fairly expensive or if there's a small difference between the two deductibles. Drivers should do their own calculations when choosing deductibles in order to determine the relative risk that a high deductible poses. As most car insurance policies have several different deductibles for different types of coverage, a policy holder may need to do several calculations to choose the right deductibles for each area of a policy.

When considering a high auto insurance deductible, it's important to look for car insurance quotes. Drivers should make sure that they're getting the best possible premiums, as a higher auto insurance deductible means a higher risk. Low deductibles are obviously preferable, but a high deductible can make sense and should be considered as a way to bring down the overall cost of an auto insurance policy.