When shopping for car insurance, you might have encountered the term “deductible.” It is important to have an understanding of the term and how it can affect your insurance premium. A deductible is an amount of money that you will pay out of the pocket before insurance kicks in. Let us say the cost of damage to your car during an accident is $7,000 and your deductible is $1,000. You will pay the latter and your insurer will shoulder the rest.
So what impact will your deductible have on your insurance premium? The website of Zavodnick, Zavodnick & Lasky, LLC, revealed that the higher the deductible, the lower will be the monthly insurance rate. However, for some people higher deductibles means more out-of-pocket expenses. So the best option is to choose a deductible that you can afford. While there are policies that have no deductible, the insurance cost is significantly higher.
On the other hand, you can also opt for lower deductibles. It will definitely increase your monthly premium as well as your overall payment. But the difference now is that you can file and pay a claim and have your insurance company shoulder the rest of the bill. So it is generally it is up to you to decide the right deductible to add to your insurance premium.
When choosing a car insurance deductible, you should think about affordability. It will all depend on your budget. Consider your income, household budget, savings, and available credit. If all these will suffer with a high deductible, then by all means go for a lower one. It’s your choice. Understanding deductibles can help you get the right coverage at the right price.
It is worth noting that the cost of deductibles will vary from one state to another so make sure you get in touch with your insurance provider.