What is a car insurance deductible?

A car insurance deductible is the expense the insured is responsible for in the event of a car theft or an accident. Once the damages to the car are determined, the deductible is subtracted from the total. What remains is what the insurance company will pay.

The amount of your car insurance deductible will depend on your unique auto insurance policy but they typically fall in the range of between $0-$1,500. Some car insurance companies lure their customers in by offering a lower deductible to start out.

Many customers who are shopping for car insurance hope to pay a lesser amount for monthly car insurance payments and by raising a policy deductible its very possible to take advantage of cheaper car insurance rates.

While some people prefer to have a higher deductible and a lower premium, some people would rather have a low deductible and a higher premium.

The financial situation of the person who is obtaining the car insurance will most likely determine their decision as to whether their deductible or premium will be higher.

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Is having a high car insurance deductible good or bad?

Having a higher deductible will allow for lower payments during the year for the premium plan, but in the event of an accident, the driver will need to pay more when they may least expect it.

On the other hand, if a driver goes a long time without a claim or even an accident, then a higher deductible will actually play out in their favor. They will have a low premium and not have to worry about paying the deductible.

However, having a high deductible and lower premiums makes your financial responsibility each month less risky. If a driver covered by an insurance company is in and out of employment, they may need a lower deductible in order to stay on top of their monthly finances.

In this case, they will select a higher deductible to make sure that they remain covered by paying their payments on time.

Many auto insurance companies seek drivers with clean records to offer higher deductibles and lower premiums to, in order to save money.

If a driver has a poor driving record, the insurance company tends to offer a higher premium. This is because he or she may end up in more accidents than their average customer and be more costly to the company.

When should you adjust your deductible?

The good thing about having longstanding relationship with a reputable auto insurance company is that your deductible can be adjusted after a certain period. As a person progresses in their career, thus earning a higher salary, they may want to adjust their deductible to a lower amount in the event that they have an accident in the future.

If they are comfortable with their financial situation and are able to pay a higher monthly premium, it may benefit them in the end.

Many companies or businesses that send their employers on job assignments using company cars may opt to cover their employees under the company’s insurance plan. This insurance plan may have a lower deductible and a higher premium because the employers will be in control of the vehicles.

In the event of an accident, the company does not want to pay out a lot of money. Therefore, a company can easily pay a higher annual premium in order to protect its employees and the company’s finances.

What else does a deductible affect?

Obtaining the perfect deductible can be tricky at times. Although many people may believe that having a higher deductible means lower premiums, a car insurance deductible means much more than that.

Young drivers typically sign up for a lower deductible and a higher premium because they are at a higher risk for accidents. Yet, once a young adult is out on their own, they will take a lower premium due to their tight budget.

Your driving record affects your recommended deductible. A car insurance company may recommend higher deductibles for drivers who have a clean record, yet lower deductibles for risky drivers.

The number of damages that are covered for bodily and auto injuries will vary depending on the selected insurance plan and deductible amount.

Clean driving records work, as well as obtaining good grades for lowering insurance costs. If a car insurance company sees that a driver has a clean record, they will offer discounts and special rates for each monthly payment.

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Related posts:

1. How does a car insurance deductible work?
2. How can I waive my auto insurance deductible?
3. What is Collision Coverage?