The word "deductible" is used frequently in the auto insurance industry. A deductible is the dollar amount you must pay before your auto insurance policy pays for any damages your vehicle endured during an accident. If you are about to purchase a new auto insurance policy, you might wonder how much you should pay for your deductible.
Here are a few helpful tips for selecting the right car insurance deductible.
Determine If You Can Afford Out-of-Pocket Expenses After an Accident
When looking through different deductibles, the first thing you should think about is the out-of-pocket expenses you can realistically afford in the event of a car accident. If you are on a tight budget, it might be wise to choose a low deductible and higher monthly premiums. On the other hand, if you are financially stable, it may be better to choose a higher deductible.
Look at the Value of Your Vehicle
The next thing you should do is determine how much your vehicle is currently worth. For example, if your vehicle is new and worth a lot, it may be best to get a high deductible. If your vehicle is more than several years old, however, it might not be worth it to pay a high deductible.
Consider How Often You Have Accidents
When deciding on a deductible, you also have to think about how frequently you get into car accidents. If you get into many accidents, you may be better off getting a lower deductible. This way, you will have fewer out-of-pocket costs to worry about after getting into a vehicle accident.
Assess Your Risk
Even if you are an excellent driver and do not have frequent accidents, you still have to consider your risk. For example, if you have to drive through busy intersections to work, you may have a higher risk of getting into a car accident and having to file a claim. If this is the case, you may want to pay a low deductible and higher premiums.
If you, however, do not drive very often, your risk may be very low. In this situation, it may be in your best interest to choose a higher deductible.
If you follow these helpful tips, you can select the best auto insurance deductible. If you have additional questions about choosing an auto insurance deductible, you should not hesitate to schedule a meeting with your insurance agent as soon as possible.