How Much Auto Insurance Deductible Should I Have?

Medical insurance and auto insurance have two things in common, deductibles. One of the first questions you will have to answer when you start shopping for either is how much of a deductible do you want to pay. For medical insurance the answer is fairly easy to determine, if you do not go to the doctor very often get a higher deductible, if you do get a lower one.

Unfortunately, figuring out which deductible is right for your situation with car insurance isn’t quite so easy. It is not like you can use the same equation, well if you don’t have a lot of accidents get a higher deductible, if you do get a lower one. Unlike your health, accidents are unpredictable. So, what is the best way to figure out which deductible is the best for you?

First, you need to know what you can afford in terms of a premium. Your deductible will depend largely on how much you pay for your insurance policy. The more you pay, the lower the deductible. If you are on a relatively strict budget you will want to purchase a higher deductible. This means that if you are in an accident, or have claim, you will have to pay more out of your pocket before the insurance company starts kicking in.

If you have a loan on your car, then you will be required to carry full coverage on the vehicle, you can help defray the cost of this coverage by buying a package that has a higher deductible. This is another simple equation; higher deductible always equals lower premiums.

Consider also if you are in an “at fault” state. This is a state in which “blame” for the accident is “required to be assigned to one of the drivers, in most cases. If you are, go back to the equation, how much can you afford to spend, out of your pocket, if you hit someone? If your deductible is $1,000 but this is way more than you could ever come up with at one time, you may want to look at paying a higher premium and getting a lower deductible.

The deductible also kicks in if you have comprehensive insurance and your car is broken into or vandalized. You will have to pay the first round of expenses, up to the deductible amount, and then the insurance company will begin to pay.

In the long run, the only way to truly make the right decision for you is to determine your personal financial factors such as your income, do you have any savings, how’s your credit (this will effect your premium and in turn your deductible options), what type and age of car are your driving, what kind of driving record to do you have? All of these aspects come into play when getting car insurance and some will determine what type of quote you’ll receive.

When going over the quotes, consider the deductibles realistically. If you were in an accident, can you feasibly pay that amount? Could you pay more? These are the questions that will help you determine which deductible is right for you. It truly is a circumstance that must be dealt with on a case by case basis, there is no blanket answer. Only you will know for sure what is right for you.

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