When considering auto insurance, one of the great debates is about deductibles. What is the right deductible? While a low deductible may be beneficial in the event of an accident, it increases your premium, while adjusting the deductible upwards to lower the premium may be costly in the event of a claim. Here are a few tips, courtesy of the blog at http://homeinsurance.com/blog
to help determine what amount you and your family would be comfortable with for a deductible.
1) Avoid the Very-Highs and the Very-Lows
Let's review how a deductible works. The deductible is the amount you pay in the event of an accident before your insurance policy starts to pay. So with a $250 deductible, and a $1,000 accident, you pay $250, and your insurance pays the balance of $750. So a high deductible, while lowering your premiums, increases your out-of-pocket expense. A low deductible keeps your costs low, but increases your premium. Our recommendation is to find something in-between. Balancing the risk and the premium costs is essential to choosing the right deductibles.
2) Know Your Comfort Zone
The most important thing to think about when looking at your deductibles is your family situation. How much would you really be able to, or comfortable with, spend on a claim right now? If you typically have $1,000 in extra funds to pay for a claim, perhaps a $1,000 would work for you. You can always lower your deductible until it's in your financial comfort zone. While you may pay a few dollars more a month, you wouldn't necessarily face a hardship should you need to make a claim.
3) Examine Your Risk Factors
As anyone will tell you, no one can predict when an accident will occur, but you can try to figure out what your risk might be. If you are the proud parent of teenage drivers your risk factor is a little higher than a middle-aged couple with only a few miles on their odometers. If you have a riskier driving situation then perhaps a lower deductible will pay off in the long run...
The best advice that we can offer in this situation is to give us a call and chat with us about your coverage and deductibles and we can work together to determine what is most advantageous for your situation. Whatever your deductible is or will be it is important to be prepared - if you select a $500 deductible it would be wise to make sure you always have that available for you. That way, in the event of a claim or accident, you wouldn't need to worry about finding the funds.