When you have auto insurance, one of the elements of your coverage that you have control over is the amount of your deductible. Your deductible is what you have to pay before your insurance company will step in and cover the rest of the damage to your vehicle. Deductibles apply to both your comprehensive and collision coverage.
You can go with a lower deductible, or you can opt for a higher deductible. Generally, if you go with a lower deductible, the cost of your premium will increase, and if you go with a higher deductible, the cost of your premium will decrease.
In order to determine what amount you should set your deductible at, there are a few questions you need to consider.
Question #1: Can You Afford the Deductible Amount?
The first thing you need to consider is how much could you afford to pay for a deductible if you got into an accident today. If you can't afford to pay your deductible, your insurance coverage will not really help you at all.
You need to make sure you are able to afford to make a one-time payment in the amount of your deductible. For example, if your deductible was set at $1,000, you need to have access to $1,000 at all times in order to pay your deductible. If you can't afford to pay your deductible, lower it to an amount you can afford in an emergency situation.
Question #2: What is the Value of Your Vehicle?
Next, you need to evaluate the value of your vehicle. If your vehicle is really new, it may make sense to carry a high deductible as that will allow you to access lower insurance premiums when you already face various factors that make your insurance rates higher.
If your vehicle is over a decade old, you may not want to carry a high deductible. A lower deductible may make sense when the value of your premium is lower overall.
Question #3: How Often Do You Get into Accidents?
Third, evaluate how often you get into accidents. Although you can't predict if you will get into an accident, you can evaluate how many accidents you have gotten into. If you have gotten into a lot of accidents, you may want to carry a lower deductible. If you have never been in an accident, you may want to carry a higher deductible as you don't have a high chance of paying that deductible.
When it comes to your insurance, the value you set your deductible at impacts your insurance premium. Think carefully about what to set the value of your deductible to, as it will impact your premium.Share