Is the cost of fixing the dent that you just put in the other guy’s car worth more money than your entire vehicle’s Blue Book value? Do you find yourself exhilarated by the excitement when you place a large bet that you can’t possibly hope to pay should you lose? Does flaunting the recommendation of your car insurance agent, when it comes to setting your deductible, give you a visceral thrill?
When it comes to obtaining cheap auto insurance, setting a high deductible can be instrumental in getting an affordable monthly premium. In doing so, insurance customers are playing a finely balanced game between enjoying the savings realized by a higher deductible and the peace of mind that is afforded by a lower deductible amount.
Benefits of a Lower Deductible…
A low deductible is instrumental to providing you the peace of mind that you want as you tool about the roadways in your town. A low deductible means that in case of an accident, your initial out of pocket cost is minimized. Typically, a low deductible will be about $250 which means that, in the event of an accident that causes $2,500 worth of damage, you are only required to pony up 10% of the cost needed to fix it.
In this scenario the driver sacrifices lower monthly payments in favor of foregoing a hefty payout should the unthinkable happen and they find themselves involved in an accident. The consumer who adopts this approach to obtain cheap auto insurance does so because they are hesitant to absorb a big payout should their fender get in a bender. These risk-adverse drivers are banking on the fact that accidents will happen, and when they do they won’t be required to sell the house in order to pay for costly repair bills.
Benefits of a Higher Deductible…
Conversely, for those who don’t mind living on the edge and need to see an extra ten or twenty dollars in their pay envelope each payday, setting a higher deductible is a great way to realize that goal while still maintain your mandatory insurance requirements. In this instance, a $1000 deductible will put you on the hook for nearly half of the repair bill from the above example.
As a caveat, if you have financed a vehicle then this option may not be available to you as an avenue to getting cheap auto insurance. Typically speaking, car financiers will mandate that you maintain a minimal $500 deductible in case of an accident. It should be noted that the demand is not made because they have an overarching concern for your financial well-being, but rather they are concerned that if you are faced with a $1000 repair bill, then you will be less likely to make that monthly car payment to them.
Getting cheap auto insurance means understanding your options and assigning the correct risk factors to your particular driving situation.