Car insurance might seem confusing at first blush. Rest assured that even something as initially puzzling as choosing a car insurance deductible is easier to understand than you might think. All you need to do is take a few steps to pick a deductible amount perfect for your needs.
What Is a Car Insurance Deductible?
First, understand how car insurance deductibles work. A car insurance deductible determines how much out-of-pocket money you need to spend before your car insurance takes over paying for repairs or replacement costs.
For example, if you crash into your mailbox at a slow speed, you may only incur a few hundred dollars in damage. Depending upon your deductible amount, you may not need to call your insurance company before initiating repairs. After all, if your deductible is $750 and you expect to pay $500 to fix some scratches on your car, your car insurance will not come into play anyway.
On the other hand, if you suffer extensive vehicle damage or loss beyond your deductible amount, you will definitely want to contact your insurance agent. That way, your agent can help you submit a claim and get properly reimbursed.
Car Insurance Deductibles Versus Premiums
Many people get car insurance deductibles confused with their premiums. Although your deductible will affect your premium, the two are very different. Essentially, the premium is the price you pay monthly or annually to remain covered by your preferred auto insurance provider.
Typically speaking, the higher your deductible amount, the lower your premium will be. If you want to pay less in premiums, you will need to consider a higher insurance deductible amount. Of course, this means you will pay more out of your own wallet if your vehicle gets damaged, lost or destroyed.
Choosing the Best Car Insurance Deductible Option
Car insurance remains highly personalized, which provides you with plenty of chances to figure out which car insurance deductible option makes sense for your budget and lifestyle. On the current market, the $500 car insurance deductible amount remains a fairly standard choice among car insurance buyers. Again, this means you will not pay more than $500 for any covered collision or comprehensive liability event. At the $500 car insurance deductible amount, you can expect to pay up to around $160 monthly for your non-bundled insurance premiums.
In addition to $500 deductibles, $1,000 deductibles have come to the forefront as a second option for people who want to lower their premiums further. You could potentially save $20 or so each month with a $1,000 deductible, which adds up to several hundred dollars yearly. Nevertheless, if you do have to pay for repairs, you may end up spending more than you would have if you had chosen a lower deductible.
Other factors to consider before signing on the dotted line include how old your vehicle is, how often you drive and your driving track record. Plus, you need to be able to afford both the premiums and the deductible.
Advantages of Bundling Car and Other Insurance Types
If you own or rent a home, you will need other types of insurance as well as car insurance. Talk to your local insurance agent about potentially bundling all your insurance. Doing so can enable you to enjoy lower deductibles for auto insurance without necessarily paying tons more in premiums.
