There are two sides to increasing vehicle insurance deductibles. On the one hand you can reduce your policy premium considerably. On the other hand you will have to pay more out of pocket if you do have an auto insurance claim. Unfortunately there is no way of guessing how many claims you will have in your policy period and this makes it very hard to decide what to do.
Usually, Liabilities covers come without deductibles. You can decide how much deductibles you will have on Collision and Comprehensive Coverage. Collision is usually higher although a few companies set both the same. Deductibles are the amounts you will have to pay out of your wallet before you can claim the rest from your insurer.
As you are probably aware, each state has own insurance rules and these affect car insurance rates charged resulting in different costs across 50 states in America. This is another factor that makes it difficult to come to a clear conclusion about savings achieved by increased deductibles.
Essentially, where you live will determine how much you can save.
However, it is possible to discuss it in general terms. For example, if you double your deductibles from $500 to $1000 you are like to save around ten percent. This is a general guidance but not a rule. You may be able to save only five percent in your state or it could be as much as twenty percent if you are lucky.
One of the reasons why insurance companies offer discounts for increased deductibles is that this action reduces the claims. When you have a higher deductible you are more likely to give up on small claims in comparison with lower amounts. For example, if your damages are around $1500 you may feel that you should make a claim when your deductible is $500 since you will get paid $1000. When your deductible is $1000 you are the one covering $1000 of the damages and insurance company is only paying $500.
It is important that you get yourself quotes with higher and lower deductibles and see if the savings make it worth the increase. Where you live and the company you get quote from are two key factors in the final reductions. That is why one of the best ways of making a decision is to see the figures in front of you. Then, you know exactly which course of action to take in this case.
Also, what sort of a driver you are should be taken into the account. If you are a good driver it is a good idea to get the savings today as you are quite unlikely to make a claim. If you haven’t made a claim for years it is a fairly safe bet that you will not make one shortly, although there is no guarantee that you will not make two.
In any case you have to make sure that you have enough money in the bank to pay for the deductible you have chosen should you have a claim. It is always better to be ready for the worst-case situations.