If you compare online auto insurance quotes, you'll likely compare the types of coverage available and what premium rate each company can offer. But one sure-fire way to find the lowest car insurance premium is to opt for a higher deductible. Deductible amounts can mean the difference between paying $1000 per year and $1250 per year or greater. It's well worth the extra effort to compare online auto insurance companies while tweaking this aspect of the policy descriptions.
What is a Deductible?
A car insurance deductible is a dollar amount that you - the insured - agree to pay before your insurance provider pays any amount of money on your claim. This amount can be pre-determined by you and your agent when you sign on for car insurance, and can vary by the type of coverage and company you choose. Here's an example of how a deductible works. Let's say you opted for a $1000 deductible on a collision policy, and then you have an accident that is determined to be your fault. You incur $2500 in damages to your automobile. You'll have to pay the $1000 deductible amount out of pocket before your insurance company will pay the remaining $1500.
The deductible amount determines the level of risk you're willing to share with your car insurance provider. If you opt for a higher deductible, then you will be inclined to drive a little more carefully to avoid accidents. Even a "small" accident can cause hundreds of dollars worth of damage. If you're willing to accept part of the risk, then this will likely lower your premium.
How to Choose a Deductible
Don't just select the highest deductible available. Think about how much you're willing and able to come up with if an accident occurs. You might find it difficult to come up with $1000 all at once, but $500 might be reasonable. A $250 deductible might sound more favorable to your budget, but it might cause your premium amount to skyrocket. So, weigh the pros and cons of each deductible, and select an amount that will fit your budget now and for future needs. You can enter different deductibles when shopping for cheap auto insurance online to see how the premium differs by company.
If you do opt for a high deductible, put a little money back in savings to prepare for this deductible - just to be safe. Even saving $50 per month will help ease the burden should an accident happen. In a year's time, you'll have saved $600, almost the entire deductible amount! Preparation will give you peace of mind and help prevent those burdensome surprises.
Deductibles in Coverage
Deductibles are usually available for coverage such as collision and comprehensive policies. These cover your vehicle if an accident occurs that is your fault or where no one is at fault. Most car lenders require some type of physical damage coverage for as long as you have the loan. This reduces the lender's risk in the event of an accident in which the vehicle is not repairable. The typical deductibles offered are $250, $500 and $1000. Your collision and/or comprehensive premiums could be reduced by 5 to 20 percent by opting for a high deductible.
You may also be able to choose a high deductible to lower premiums for your personal injury protection (P.I.P.) insurance. This type of coverage is often called "no fault" and provides coverage in accidents no matter who was at fault. It places limitations on your ability to sue other drivers, and each driver involved is covered by their own auto insurance policy. States that require this type of coverage are: Kansas, Kentucky, Pennsylvania, North Dakota, New Jersey, Michigan, Massachusetts, Minnesota, New York, Utah, Florida, Hawaii, and D.C. Deductible amounts for No Fault coverage are generally $0 (no deductible), $250, $500 or $1000.
Online auto insurance comparison sites will allow you to make changes to your quote request based on coverage types and deductibles. Consider what each company has to offer and how the deductible affects your quotes. Also, provide as much information as possible about your driving history, age, credit rating, possible safe driver discounts, etc. to realize the lowest possible premium. Online auto insurance quote sites can help you secure a dependable, affordable policy with the click of a mouse!
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Chris Robertson is a published author of Majon
International. All Rights Reserved. Copyright 2009 (Sat Aug 29 2009)
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