What Auto Insurance Deductible Should I Choose?

One common question asked by those shopping for auto insurance is, “Which deductible should I choose?” In most cases you will need to select two deductibles, one for collision and one for comprehensive coverage. Just a quick overview on collision and comprehensive coverage, collision coverage pays for damages to your vehicle in the event of a car accident; comprehensive coverage pays for damages to your vehicle caused by anything other than a collision such as theft, vandalism or hail damage.

The deductible will be the amount you will need to pay before the insurance company will issue any checks for damages to your vehicle. If your collision causes $5000 worth of damage and your deductible is $500, you will need to pay this amount before the insurance company pays on that claim. If the damages are only about $700 you may want to pay the damages without the insurance company since it would be only $200 more than your initial deductible. Would you really want to put a mark on your insurance claims history for $200? Could this $700 claim possibly cause your rates to increase? These are things to think about when faced with property damage you must repair.

So which deductible should you choose?

This really depends on how much you can pay in the event of a loss. The higher deductible you choose, the lower your premium will be. However, if you select a $1,000 deductible and total your vehicle, can you come up with $1000 easily? The most common deductibles chosen are $250, $500 and $1,000.

For comprehensive deductibles I generally select a higher deductible since most damages I can see happening are less costly. However, there’s always the chance of your vehicle being stolen. Take a close look at your comprehensive risks and then decide. Do you park on the street or in a garage? Is your place of work secure are have there been several car thefts or acts of vandalism? You’ll of course want to determine the risk of the car you drive. Do you drive a newer vehicle? What is your car’s value?

With the collision deductible I generally select the highest deductible I can afford to pay out of pocket at anytime of the month. If you have a clean driving record and drive extra safe, you may be well off with a higher deductible. If history has shown you’ve made mistakes in the past but haven’t changed your way of driving since, a lower deductible may be the way to go. If you don’t have much money saved up, you may want to make it a goal to save up $1,000 and put it away in a savings account just in case you need to pay your deductible in the event a loss occurs. Once you have your $1,000 saved, increase your deductible and save a little more on your premium.

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