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Many people increase their car insurance deductible in order to get more affordable car insurance premiums. By doubling your insurance deductible, you can reduce the cost of your premium by up to 40%.
However, this is only a good idea if you have money set aside to pay the deductible in case you are at fault in an accident. If you can’t get this money easily, you may not be able to pay your share of the repair bills, and your car may not be fixed in a timely manner. Worse, you may be obligated to pay for a portion of the damage to someone else’s property and be unable to do so. Many people without large cash reserves must keep their deductions low. To do so, however, they often have to pay higher premiums.
Is there any way to lower your deductible and still keep your premiums manageable?
You can accomplish this goal in a number of ways. Each method requires some planning and discipline, but each can be achieved by anyone looking for a low deductible and low premiums.
First, you may choose to insure with a company that offers a “missing deductible” program. As per these programs, your deductible is reduced by a specified amount each year that you become accident-free and claim-free. Some of these programs allow you to itemize all of your deductibles, and some only allow you to itemize your collision or deductible liability. Different companies offer different amounts and different rates for the deduction. You can compare programs to see which works well for you.
Another option is to create a plan in which you save for your deductible while gradually increasing the deductible amount every six months. Here’s how it would work: Let’s say your current deductible is $250, which is the lowest your company allows. Now let’s say you save $100 per renewal period by increasing your deductible to $500. If you do this and save the money you saved on your premiums, plus your initial $250, you’ll have $450 in year one, which is almost enough to pay your new deductible. You can continue to save money so that you can gradually raise your deductible to $750, then $1000. You can also choose to increase your deductible higher than this if your company allows you to do so. As you gradually increase your deductible, your premiums will go down, allowing you to save the money needed to pay for the new, higher deductible.
You can also find a company that offers “accident forgiveness”. With accident forgiveness, you can be “forgiven” for your first accident without any deductible if the accident total costs do not exceed a certain dollar amount. This is very useful for saving funds on your deductible if you have a minor fender-bender. You can even save money and pay for damages if the accident is very minor; Thus, by not claiming, you keep your premiums low and the cost of your automobile insurance does not increase unexpectedly.
Other ways you can lower your deductible is to apply for a deductible reduction with your insurance company, which can be offset by other discounts you may be eligible for. If you’re not currently taking advantage of all possible exemptions, you could be cheating yourself out of savings that could lead to paying a lower deductible.
Be sure to consider all the different deductibles that apply to your policy as a whole. If you have full coverage, which includes liability, comprehensive and collision, you probably have separate deductibles for each policy. In addition, you probably have a deductible for things like uninsured motorist coverage. Some states set a deductible by law for uninsured motorist coverage; You can’t increase that deductible even if you want to. However, most states allow you to pay with the deductibles on your collision and comprehensive policies, increasing or decreasing them as you see fit.
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