Who Needs Low Auto Insurance Deductibles

A car insurance deductible is the part of your auto insurance policy that you’re responsible for paying (in addition to the monthly or yearly insurance premium, of course) before your coverage kicks in.
For example, if you’re involved in an accident and your vehicle sustains damages in some way, you must pay for the damages up to the amount of your deductible. Then, if the cost to repair those damages exceeds your deductible, your coverage kicks in and your insurance company picks up the rest.
Usually, providers offer the following deductible choices: $100, $250, $500, and $1,000.

 

Low Auto Insurance Deductibles Explained

Typically, the lower car insurance deductibles are, the higher car insurance premiums are.

Meaning, the less you agree to pay in out-of-pocket repairs, the more you must pay in monthly or yearly premiums.

 

When to Have Lower Car Insurance Deductibles

It might not sound like the best option, and for many, it’s not; however, choosing low auto insurance deductibles might be a good option for folks who:

• Can’t afford high out-of-pocket expenses. There’s no point in choosing a deductible of $500 or $1,000 if you’re pretty sure you won’t be able to pay it in the event your car becomes damaged. This group might include low-income individuals, people with inadequate savings accounts, and folks who pay a lot of monthly bills that won’t allow for scraping up the deductible.

• Drive a lot. The more you drive, the higher the risk of being involved in an auto accident or damaging your vehicle in some other way. If you genuinely believe you’re at a higher risk than others for damaging your vehicle, choosing a lower car insurance deductible might be financially more sound.

Keep in mind that lower car insurance deductibles tend to lead to a higher number of auto claims (unless you just happen to have the money available to pay for the damages out of your own pocket at the time of the accident) and the number of auto claims you file can affect your auto insurance rates.

 

When You Have No Choice About Your Deductible

Most of the time, you can choose the kind of car insurance deductible you want―high, low, somewhere in between―whatever.

But, there are times when you might not have as much wiggle room.

For example, if any of the following apply to you, you might not have too much say in setting your deductible:

• You’ve been labeled a high-risk driver.

• You paid for your vehicle with an auto loan and your financial institution insists on a certain deductible.

• You lease, rather than own, your vehicle and your lessor insists on a certain deductible.

Of course, if one of these describes your situation, or you aren’t happy with the price you’re paying for auto coverage (your deductible and/or your premium) for some other reason, you can always compare quotes from other providers.