After my friend got into a pretty significant car accident, I began thinking about ways to prevent the same type of thing from happening in my own life. I started driving safer and working on eliminating issues, and while it was difficult, it really helped me to clear my head while I was on the road. I also opted for a higher auto insurance policy, which I felt would be especially helpful in the long run. Now I can honestly say that my car is covered and I don't worry too much about the ramifications of other drivers on the road. Read this blog to learn more.
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If there is one key factor that affects car insurance rates the most, it would probably be the deductible amount on the policy. This amount represents the money a policyholder pays out when making a claim prior to the insurance company paying the rest of the claim. The deductible amount you choose will affect your rates, and here are several things to understand about this.
Risk levels
Insurance rates are all about risk levels, and this is why high-risk individuals pay higher auto insurance rates than low-risk individuals, and your deductible affects the risk level the insurance company places on you. If you have a really low deductible, such as $250, you will be considered a higher risk to the insurance company than if you chose a $2,000 deductible. If you are trying to save money on car insurance, one of the easiest ways to reduce your bill is by increasing the deductible amount on your policy. This will instantly reduce your risk level to the insurance company, and you will see this in a drop in your rates.
Less money to pay out
The main reason that you will have a lower risk to the insurance company with a high deductible is due to the money they must pay out. If you have a high deductible, the insurance company pays out less for a claim that you file and that they approve. When the deductible is low, they pay out more money.
Tips for choosing the right amount for your deductible
Now that you understand why your deductible affects the rates you pay, you will need to think about what amount you would like to have as your deductible. If the top priority you have is to save money on your premiums, then you should choose an amount that is relatively high. If you care primarily about having plenty of coverage and not having to spend a lot of money out of your pocket if you file a claim, then it might be better to have a lower deductible. You are free to choose the amount you would like for this, and you may want to discuss your options with an insurance agent before you choose.
Asking for quotes that have different deductible amounts is a great way to find out the differences in prices based on various deductibles. To get a quote, contact your local insurance agent today.
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