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Saving with a Higher Deductibles

Car insurance deductibles are your friend! The higher the deductible, the lower the premium. A deductible is what you pay before your car insurer pays their portion of the claim. Insurance companies use deductibles to lower their risk and reduce the amount of minor claims. Consumers will not report a claim that does not meet the deductible minimums. If insureds have to pay a portion out of pocket, they will be more careful and try to minimize claims.

If you are a driver with tickets or at fault accidents you will almost certainly need a higher deductible, since your premiums will be much higher than average.

Ask your insurance provider for quotes for various deductibles, and analyze them carefully before making a decision. When you get quotes through insurers in the beige box at the top, change the deductibles around to see how it changes your cost. ead more tips about online rates. Doubling your deductible from $500 to $1000 could reduce the comprehensive part of your policy from over 20%, varying on the insurer.

The deductible chosen should reflect what you can pay in case of a claim. Fewer insurers offer no deductible plans. Different types of coverage offer different deductibles. Comprehensive and collision (aka physical damage) pays for damage to your vehicle regardless of fault. If you finance or lease your car or truck, the bank or credit union will require that you carry comprehensive and collision.

Typical deductibles

Typical Comp and Collision deductibles range from (sometimes $100) $250, $500, and $1000. Choose lower deductibles for Comprehensive because it covers smaller items like vandalism. A popular combination of deductibles are a $100 deductible for Comprehensive and $250 deductible for Collision. Just remember that lower deductibles increase your premiums.

No fault deductibles

Personal Injury Protection (PIP or Medical) also is sold with a deductible. This has been referred in some states as No Fault. No Fault insurance is auto insurance that requires drivers to carry insurance for their own damages, and puts caps on a drivers ability to sue others for their injuries and damage.

Under no fault laws, your car insurer will pay for your damages, no matter whose at fault. Other parties to the accident may be covered by their car insurance. No Fault coverage is mandatory for drivers in DC, Florida, Hawaii, Kansas, Kentucky, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, Pennsylvania, and Utah.

Consider a deductible on Personal Injury Protection or No Fault if you have health coverage elsewhere, since you can only make one claim per injury. Some health insurance policies may exclude auto accidents, depending on state law and your insurer, so check your policy.

Key points:

• The higher the deductible, the lower the premium
• High risk drivers need a higher deductible
• Get a deductible you can afford to pay
• Vary deductibles when shopping

Written by Craig J. Casey

Financial Writer helping people with their insurance problems on the net since 1998.

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