The deductible is not a new term for those who have already purchased the general auto insurance. However, first-time buyers need some guidelines to select it intelligently.
Let’s understand the deductible in a simple way!
Deductible basically allows you to share the risk with the car insurance company. It means that in case of claiming the protection, you need to pay the deductible before the insurer pays. The insurance company is responsible only for that particular amount, which is above the deductible. If you have totaled your car, the insurance company will pay the actual value of your car after deducting the deductible. It is all about the deductible.
The buyers have only one concern. They want to keep it as low as possible, but along with that, they also want to keep the insurance premium within their budget. Here, they need a proper planning. If they are willing to reduce the insurance premium, they need to increase the deductible. Conversely, the insurance premium costs will increase.
Generally, the deductible remains in between $500 to $2,000. However, with a small effort, you can reduce it even more. As the buyers have only one choice and that is to reduce the deductible, so they just need to understand the rules that will help them select the most affordable amount.
What should you consider?
While choosing your deductible, you must think about the amount that you can pay out of pocket if there is an accident. You must also keep in mind that it will affect your insurance premium as well. It means that your budget will be under control. If you will follow both options, you will be in a better position to estimate the deductible.
How to set your deductible?
Here are some tips for you:
Choose the most affordable one
You know exactly how much amount you can arrange if there is an accident. For example, if you are finalizing deductible at $500, you must know that you have at least this amount in your pocket or bank if you get into an accident.
Keep your car value in your mind
When you decide to buy the general auto insurance, you need to get the market value of your car. It will help you decide whether you need collision coverage, comprehensive coverage or both. You can also choose the best deductible amount after getting these estimates.
Keep the purpose of insurance in your mind
We normally think that our small losses must also be covered through the car insurance. The car insurance is to protect us from a financial crisis. If we will use it even for the small losses, it will not help us in a crunch and critical situation.
You must not be extremist in taking decisions about the deductible. It means that you need to adjust the deductible according to your budget. If you will keep it at the lowest that can easily be afforded, it is not a wise decision. On the other hand, keeping deductible at its maximum may not be the best decision as well.
Key things to consider
Following things must also be considered:
You need to learn the highest and lowest deductible amounts and compare the insurance premium by changing the values between them. If you are checking it online, you will change the deductible amount and re-run the application. If you have an agent with you, ask him to provide a chart that will help you finalize your decision.
Your personal tendencies, performance on the roads and driving record help you determine the deductible. If you behave like a gentleman behind the steering wheel, have a wonderful driving record and no personal grievances, you can go even for the highest deductible. Conversely, you need to be careful and should take an intelligent decision.
Keep this thing in your mind that deductible is available only with collision insurance, comprehensive insurance, and uninsured motorists insurance.
If you still think that something is missing in it, you can consult with an independent insurance agent who will help you clear all the ambiguities present in your mind about the deductible.