How to Choose the Right Auto Insurance Deductible

Auto Deductible

Auto automobile insurance is state-mandated and every driver must prove financial responsibility before they can register a car for public use. While the state may mandate the minimum limits of liability drivers must insure, they refrain from telling drivers what to do about the physical damage deductibles. There are a few things to consider when choosing a deductible for you auto insurance policy

Difficulty:

Moderate

Instructions

1. Review your auto financing contract. If you did not pay cash for your car and you took out a loan or leased the car, check your financing agreements. Some finance companies stipulate the maximum deductible you can have on your auto policy to remain in compliance with your auto financing.

2. Car Insurance

   Think about your budget. A deductible is not a one-time expense. If you are unfortunate enough to have several car accidents, you will have to reach into your pocket for the deductible amount for each and every claim. Select a deductible that you can afford to pay each and every claim.

3. Consider the year and make of the car. The deductible requirements for a brand new luxury car differ from the auto deductible requirements for a 10-year-old car. Do a little research on the average cost of repair for your vehicle before determining which deductible to take.

4. Auto Insurance Deductible

   Analyze the out-of-pocket expenses versus the insurance premium savings. The higher your deductible, there are more money you save on premium and visa versa. Have your insurance agent give you alternative quotes for varying deductibles. Analyze the difference between the out-of-pocket expenses and the potential premium savings and come up with something that works for your budget.

Resources

• Teen Drivers and Auto Insurance Rates
• Business Auto Insurance - Underwriting Checklist