Under the physical damage portion of your auto insurance, you will see two coverages.
- comprehensive and
- collision coverage
These coverages are both subject to a deductible. This is true on both your personal car insurance and also a business auto policy.
The question becomes, what deductible should I carry.
What deductible should I have?
A Deductible is what you have to pay out of your pocket initially before the insurance company is going to pay any money towards a claim.
When deciding what deductible is best for your insurance, you need to think of a few different factors.
- Do you have that amount saved away to use in case of an accident
- How much does the premium change by changing the deductible
- How much am I willing to risk in the event of an accident
Since the deductible comes into play before an insurance company starts paying towards damage, it is important to make sure you have that money set away in case you need to use it.
The higher the deductible is the lower your rates will be. But, the question is how much lower. Understanding the difference in premium to lower or raise your deductible is important. If raising your deductible changes your premium only a small amount, it might not be worth it.
Let’s face it, not all accidents are your fault or in your control. Having to pay a high deductible because a tree branch fell on your car or someone hits you in a parking lot and takes off can be a tough pill to swallow.
Understanding what you have and what you are ok with paying out if something happens is important.
Not all insurance company’s or insurance consumers are going to treat this the same.
We recommend deductibles at $250 for Comprehensive coverage and $500 on collision in our agency. This is where we found the happy medium of insurance premium savings without increasing your out of pocket expenses by too much.
Reach out to your insurance agent to have this conversation about your deductibles, what it would do to raise or lower so you get a good feel at what fits for you and your family.
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