Global Courant
Many people raise their auto insurance deductibles to get cheaper auto insurance premiums. By doubling your deductible, you can save up to 40% on the price of your premiums.
However, this is only a good idea if you have money set aside to pay the deductible if you have an accident at fault. If you can’t get this money easily, you may not be able to pay your share of the repair bills and your car may not get repaired in a timely manner. Even worse, you could be required to pay for some of the damage to someone else’s property and not be able to do so. Many people without large cash reserves need to keep their deductibles low. However, they often have to pay higher premiums for this.
Is there a way to lower your deductible and still keep your premiums manageable?
There are several ways you can achieve this goal. Each method takes some planning and discipline, but each can be achieved by anyone looking for a low deductible and low premium.
First, you can choose to insure yourself with a company that offers a “disappearing deductible” program. Under these programs, your deductible decreases each year by a fixed amount that you are accident-free and claim-free. Some of these programs allow you to reduce all of your deductibles, and some only allow you to reduce your deductible for collision or liability. Different companies offer different amounts for the deduction and at different rates. You can compare programs to find one that works well for you.
Another possibility is to make a plan in which you gradually increase the amount of your deductible and slowly increase your deductible every six months. Here’s how this would work: Let’s say your current deductible is $250, the lowest your company allows. Now suppose you saved $100 per renewal period by raising your deductible to $500. If you do this and save the money you saved on your premiums, plus your first $250, you would have $450 in one year , almost enough to pay your new deductible. You can continue to save money so that you can gradually increase your deductible to $750 and then $1000. You can even choose to raise your deductible higher if your company allows it. As you slowly increase your deductible, your premiums will decrease, allowing you to save the money you need to pay the new, higher deductible.
You can also find a company that offers “accident forgiveness.” Accident forgiveness allows you to be “forgiven” for your first accident with no deductible if the accident does not exceed a certain amount in total costs. This is very useful to save your deductible if you have a small fender bender. You can also save money and pay for the damage yourself if it is a very minor accident; this way, by not filing a claim, you keep your premiums lower and avoid unexpected increases in the price of your car insurance.
Other ways you can lower your deductible are by requesting a deductible discount from your insurance company, which can be offset by other discounts you may be eligible for. If you are not currently taking advantage of all possible discounts, you may be cheating yourself with savings that allow you to pay a lower deductible.
Please think carefully about all the individual deductibles that apply to your policy as a whole. If you have full coverage, including liability, comprehensive coverage, and collision, you will likely have a separate deductible for each policy. In addition, you probably have an excess for uninsured motorists, among others. Some states set the deductible for uninsured motorists by law; you cannot increase that deductible, even if you wanted to. However, in most states, you can pay with your collision deductible and comprehensive policies, increasing or decreasing as you see fit.
How can you lower your auto insurance deductible?
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