Understanding Your Auto Insurance Deductible: How Much Should It Be?
The hope with auto insurance is that you’ll never actually have to use it. Each month or every few months you pay a premium so that you’ll be protected in the event of an emergency. So, what if that emergency happens? What if you’re in a car accident and need to cover expenses? That’s where your deductible comes into play. Read on to learn more about this aspect of your auto insurance.
What is an Auto Insurance Deductible?
Your deductible is the amount of money you pay out of what you’re liable to pay when you use your insurance. It can be anywhere from a thousand to a few thousand dollars. When you have a higher deductible, you pay a lower premium. A lower deductible means a higher premium. Though your insurance company will make recommendations, ultimately, it’s up to you to decide what your deductible will be.
Factors to Consider when Choosing a Deductible Amount
When choosing a deductible amount, one of the first things you should consider is the likelihood of needing to pay your deductible. Anything can happen on the road, but some areas are safer than others. If you live in an area with a high rate of car accidents, a higher monthly payment might be worth it to lower the cost of your deductible. However, if you don’t do a lot of driving or live in a safer area, you may consider taking the gamble on a high deductible to lower your premium. Whatever you choose, make sure your deductible is something you can afford in the event of an emergency.
Pros and Cons of High Deductibles
The main benefit of a high deductible is paying a lower premium. However, choosing a higher deductible means you need to come up with more money out of pocket in the event of a serious accident where you have liability. In the ideal scenario where you don’t use your deductible, it’s a great way to save money. In an emergency, however, you could be stuck with a steeper expense than you anticipated.
Pros and Cons of Low Deductibles
A low deductible means that you’re taking less risk. You’ve decided to pay more for your insurance premium rather than test your odds of not needing to pay a high deductible. There’s also the simple fact that you need to know you can reasonably pay your deductible in the event of an emergency. If your income is low enough that paying $2,000 out of pocket would cause you to take a huge hit, opting for a lower deductible makes more sense.
Your auto insurance deductible can make a significant difference in the rate you pay for insurance. Consider your options before signing the dotted line. If you’re in the market for auto insurance, you can shop coverage options from over 50 top-rated insurers today using Nsure. Our trained and licensed agents are available 24/7 to answer any questions you may have. Be sure with Nsure!