If you're a safe driver, you may be able to offset the costs of your car insurance policy by opting for a high collision deductible and a low all-risk deductible. This ensures maximum coverage in the event of unexpected incidents and “fortuitous acts” as part of its comprehensive coverage. Plus, comprehensive policies are usually cheaper than collision coverage. Collision coverage pays for any damage to your vehicle caused by a collision with an object when you are at fault.
Any claim you file for damage covered by a collision will be subject to a collision deductible. When selecting a deductible, consider how comfortable you are with out-of-pocket expenses that are higher than your monthly costs. A high deductible will reduce your overall insurance rate, but will increase your out-of-pocket costs if you file a claim. A low deductible means a higher insurance rate, while a high deductible means a lower insurance rate.
Read on to learn more about how deductibles work, when they apply, and how to choose the right deductible for your car insurance policy. Increasing your car insurance deductible can help you save hundreds of dollars on your annual insurance costs. The car insurance deductible is the amount you must pay out of pocket when you file a claim with your insurance company for a covered loss. The car insurance deductible is the amount that your auto insurance company will deduct from the claim check.
Before deciding on a deductible, most insurance professionals suggest that you figure out how much you can afford if your car is damaged in an accident. In most cases, you can adjust or decrease your car insurance deductible at any time during the life of the policy. That's because the lower your deductible, the more your car insurance company will have to pay if you file a claim. Most auto insurance companies require that you pay the deductible to the repair shop, while the insurer would pay the balance minus the deductible.
If your car insurance deductible is greater than the cost of damage to your vehicle, you'll pay the full cost out of pocket since the insurer only covers damages that exceed the amount of the deductible. If you opt for a lower deductible, your car insurance rate will likely be higher, but you'll have lower out-of-pocket costs if you file a claim. You can opt for a higher car insurance deductible because you're betting against having an accident, but if you've had accidents in the past and drive often on higher-traffic roads, you're more likely to file a claim and pay a deductible. After paying the amount of the car's deductible, your insurer will cover the remaining cost to repair or replace your vehicle.
While your deductible level can be used as a tool to help control your insurance premiums, it's not always the most effective way to save on car insurance. You determine the amount of your car insurance deductible with your insurance agent or company before finalizing your policy. If you live in an area where cracked windshields are common, it might be wise to choose a low car insurance deductible to replace your windshield.