How Deductibles Influence Car Insurance Costs

Agreeing to pay some voluntary excess (also known as deductible) before the policy kicks in, means that you will have more financial responsibility. Find out how deductibles influence the insurance costs and get a car insurance quote online.

get a car insurance quote onlineThe value of deductibles impacts what you pay in premiums, and is one of the ways that drivers can control the insurance costs. The amount of the deductibles is inversely proportional to the premium, so increasing your deductibles will lower your rates, and vice versa. Increasing deductibles can save drivers money on their auto insurance premiums.

Collision and comprehensive are two coverage options that require deductibles. And since collision coverage costs about 4 – 5 times higher than comprehensive coverage this means it is more cost-effective to select a higher deductible for your collision coverage and a low deductible for your comprehensive coverage.

If you select a really high deductible level, you will most likely save a generous amount of money on your entire auto insurance policy. However, the savings per month have to be weighed against the potential cost if you do need to file a claim. Having a $1,000 deductible does not make any sense if you cannot afford that $1,000 if you need to file a claim.

When you contact your insurance company to let them know you will be reducing your deductible, they will do some quick calculations and let you know what your new monthly premium will be and it will be effective immediately. Reducing your deductible means you will pay a little bit more each month. Keep in mind that deductibles range between $250-$1000 and this gives you a lot of room for making adequate changes and purchases.

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