Should You Increase Your Auto Insurance Deductible To Save Money?

Posted on: 12 November 2020

When people look for cheap car insurance plans, they often search for companies that offer the lowest rates. While this is one way to find more affordable car insurance, you can also use other techniques. One technique involves increasing your deductible. The question is whether you should do this to save money. Before you rush into a decision, you might want to think about the following things.

Understand What a Deductible Is

Before you start changing things with your policy, it is essential to understand how auto insurance works. When you consider changing your deductible, you should know what a deductible is and how it works. Your deductible refers to a specific amount of money you must pay after filing a claim that involves compensation you will receive from your insurance company. If you cause an accident that your policy covers, you must pay the deductible. Your insurance company will require this before providing the remaining compensation to you for your claim.

The Effects of Raising a Deductible

You get to choose your deductible when you buy auto insurance, and you are free to change it whenever you want. When you raise your deductible, you will notice that your rates drop. Insurance companies charge lower rates for higher deductibles because their risks decrease when people raise their deductibles. The change in your rates is the only difference you will see until you need to file a claim. When you file a claim, you will have to pay more to receive compensation from your plan.

Factors to Consider Before Increasing Your Deductible

Changing your deductible to a higher amount can offer some benefits, but you may want to consider a few things first. The main thing to consider is your ability to pay the higher deductible if necessary. You cannot predict when you might cause an accident. Therefore, you cannot predict when you must pay your deductible. If you cause an accident and need to pay a higher deductible, could you afford it? If you will have trouble paying the higher amount, changing your deductible might not be the best move for you to make.

As you can see, increasing your deductible can help you decrease your auto insurance costs, but it is not the best option in all situations. If you have questions about auto insurance, coverage, deductibles, or anything else, contact an auto insurance agent of your choice.

Continue reading more about auto insurance by reaching out to providers in your area.