To reduce your car insurance deductible, all you have to do is simply contact your car insurance company and tell them the reduction you would like to make. You can do this over the phone, online, or via e-mail.
The deductible amount is completely up to you as the customer, and you have the right to change your deductible amount at any time as long as you inform the insurance company. However, it is important to keep in mind that reducing your car insurance deductible will have some consequences.
Read on to learn all about auto insurance deductibles and then of course you want to save some money on your car insurance, right? To see how much you might be able to save just enter your zip code in above for a free car insurance comparison!
What is a deductible?
A deductible is the amount that you, the customer, pay before your insurance will kick in. When you are in an accident or when your car is damaged, you must file a claim for the replacement or repair costs. Your insurance company will not pay the claim until your deducible is met. If for some reason you cannot pay your deductible, the insurance company will not pay their amount. This is part of the terms of the contract you make with the insurance company when you get a car insurance policy.
It is up to you to name the deductible amount when purchasing a car insurance policy. Deductibles typically start at $250 and go up to $5,000 or even more. The insurance company will give you a suggestion on the deductible based on your income, the type of vehicle you are insuring, and the replacement value of that vehicle. However, it will only be a suggestion. The final amount is entirely up to you, what you think you need, and what you can afford.
Some insurance companies use a simple calculation suggesting that your deductible be 10% the value of the car. This means, for example, if your vehicle is worth $5,000, a $500 deductible would be a good amount. If you vehicle is worth $25,000 then a $2,500 deductible would be a good amount. Again, it is only a suggestion. The amount you choose should be based more on what you can afford than the value of your vehicle.
What are some of the consequences of reducing your car insurance deductible?
Though you are able to reduce the amount of your deductible at any time simply by contacting your insurance company, doing so will have some consequences. First of all, you should be aware that the higher your deductible, the lower your monthly premium will be. This is because you are taking on more of the risk and putting less risk on the insurance company. The more the insurance company will have to pay when a claim is filed, the more they will charge you each month.
When you contact your insurance company to let them know you will be reducing your deductible, they will do some quick calculations and let you know what your new monthly premium will be and it will be effective immediately. You will need to adjust your payment plan and budget to fit this new monthly premium amount. Remember, if you don’t make your payments in full and on time, you won’t be covered if you are in an accident or damage is done to your vehicle.
One of the positive consequences of reducing your car insurance deductible is knowing that you will owe less money when an accident or damage occurs. The best thing to do concerning your deductible is to set aside the amount of the deductible in a savings account or by some other means so that if it comes due, you will have the money to pay the insurance company. Reducing your deductible means you will owe less in one lump sum but a little bit more each month.
Before reducing your deductible, you should take into consideration how much your monthly premium will increase. Take this number as well as your new deductible amount and see if the increase is worth it. In many cases, it won’t be. It may be better to take the amount your premium would have increased had you changed the deductible, and put that away towards paying the deductible in the future.
Choosing an insurance company, coverage, and deductible amounts can seem overwhelming, especially with so many companies to choose from. To reduce some of the information available, you can use an online car insurance comparison rate quote tool to narrow your choices down to a few top companies. A comparison tool will show you rates and quotes from different companies side by side so you can find the company and deductible amount that is right for you. Take a few seconds and input your zip code into the tool at the top of the page to get started now!
