The deductible is the amount of money you agree to pay out of pocket before the insurance company will pay out money for your claim. For example, if you have a $500 deductible, that means you’ll pay the first $500 of any claim you file and the insurance company will pay the rest.
Deductibles help keep your premiums down because they prevent payments being made on very small losses. This greatly reduces insurance company’s costs, helping to keep everyone’s premium down. When you choose a higher deductible, you’re really buying insurance to protect yourself from a catastrophic loss, such as fire, hurricane damage, water damage and extensive vehicle damage.
If you’re looking for ways to save money on your monthly expenses, a higher deductible can pay off as long as you don’t need to file a claim. Another reason you might want to take on a higher deductible is to ensure that you pay out of pocket for small claims, which could keep your premiums lower in the long run. The more claims you file with the insurance company, the more likely your premium will rise.
Before you choose the highest possible deductible, you would be wise to consider just how much you’d save on your rates and whether you are financially prepared to part with that much cash. It’s important to remember that the higher deductible will not do you any good if you can’t afford to pay the deductible when you file a claim. If you have a small amount of money in your savings, a lower deductible would ensure you are not scrambling for cash in an emergency.
Here are some things to consider when choosing your deductible:
How much can you afford to pay out of pocket?
How likely is it that you will get in a car accident?
How much do you drive your car?
Consider all the variables before deciding which deductible is best for you. Our knowledgeable staff would be happy to discuss your different options and what might work best for you.