December 19, 2011

Why Cheap Car Insurance Policies Often Have High Deductibles

Car insurance is a necessary part of life for millions of Americans. Some form of car insurance coverage is required in all states to stay legal on the road. Many people are looking for cheap car insurance to save money on this service and stay safe. Car insurance protects people financially if they are involved in a collision. Car insurance companies help people pay the bill if they cause an accident. A very important part of any policy is the car insurance deductible. This part of the policy helps determine the price of an auto insurance policy. Insurance policies with a low price often come with a high deductible, and shoppers should understand how that works before choosing a policy.

A car insurance deductible represents the amount of money the policyholder has to pay after an accident before the insurance company steps in and pays for the rest of the damages. Deductibles are often set by the policyholder, but the lower deductible amounts come with higher monthly rates. Car insurance companies are more willing to offer cheap car insurance with a higher deductible, because the company will have to pay less when the driver is involved in a collision. A low deductible means that the company must pay more when the driver causes a collision. The car insurance companies need to offset that cost by charging more for coverage every month.

There are different types of car insurance that cover different circumstances. Liability insurance only pays for damage to the other car and people in it when a driver causes a collision. The driver that causes a collision is held financially and legally responsible for the damages to both cars and everyone in them. Medical expenses and property damage for the driver that is not at fault are paid for with liability coverage. Many people choose to purchase a more comprehensive form of car insurance coverage. Comprehensive car insurance coverage helps people on both sides of a collision pay for the damages.

Car insurance companies want people to have a reasonable deductible, because major accidents can cost a good deal of money. Cheap car insurance with a high deductible may be worse in the long run than slightly more expensive coverage with a more moderate deductible. The low rates may be attractive, but it is very important to know what the car insurance deductible is on a policy before signing up for it. A slightly higher monthly expense could significantly lower the cost of the deductible in the case of an accident. To find a car insurance policy, first find a quote with rates and deductible and compare prices between companies. Speak to an auto insurance agent about lower deductibles.