Understanding How You Can Save On Insurance Costs By Choosing The Right Level Of Deductible

28 April 2015
 Categories: Insurance, Blog

If you have an auto insurance policy, then you're most likely asked to pay for a deductible every time you submit a claim to your insurer. The amount of the deductible typically ranges from $100 to $1000, depending on the insurance company. Like many drivers, you may have opted to pay for the lowest deductible because you don't want to disburse too much money when you're filing a claim. Yet, such a strategy isn't optimal, especially if your ultimate goal is to generate savings on your annual coverage costs. Here's how you should set the level of your deductible and a few things that you must consider when it comes to finding the ideal deductible.

Choose a level that is in the middle range

If you're risk averse but still want to generate savings on your insurance costs, then you must set your deductible around the middle of the range of amounts that your insurer offers. While you will certainly be taking more risk by accepting to pay substantially more, you'll also be building up savings on a monthly basis. The savings will be created by the fact that your monthly premiums will be lower than if you had chosen the lowest deductible.

Another point worth being mentioned is that your insurance company will reward the choice of your deductible's level each month that you spend without filing a claim by accruing your savings.

Additional factors that you need to take into account

There are other factors that must be considered when it comes to choosing the right amount of deductible, such as the state of your vehicle, or if certain requirements apply. If you own an old vehicle, then it may not be the smartest idea to add it on a comprehensive policy contract. Such contracts are mainly designed to maximize the coverage on vehicles that meet a variety of criteria, including safety. But in the case of certain vehicles, there's hardly such a thing as safety. This is, for example, true with old cars.

A second factor you might want to consider is whether your financing institution wants you to observe specific requirements as part of your contract. The entity may require that you purchase a predetermined amount of auto coverage while the vehicle is still being financed, because they want to make sure that their property remains covered until it's fully paid off.

Setting the ideal deductible will help you save on auto insurance in the long run. For further assistance, contact a local insurance company, such as TLC Associates.