How can you lower your car insurance deductible?
October 13, 2022
Many people increase their auto insurance deductible in order to have cheaper auto insurance premiums. By doubling your insurance deductible, you can reduce your premiums by up to 40%.
However, this only makes sense if you have money set aside for the deductible in the event of an accident that was your fault. If you don't have easy access to this money, you may not be able to pay your share of the repair bills and your car may not get repaired in a timely manner. Worse, you could be obligated to pay for some of the damage to someone else's property and be unable to do so. Many people without large cash reserves have to keep their deductible low. But they often have to pay higher premiums for this.
Is there a way to lower your deductible and still keep your premiums manageable?
There are several ways you can achieve this goal. Each method requires some planning and discipline, but each can be accomplished by anyone looking for a low deductible and low premium.
First, you can choose to insure yourself with a company that offers a “vanishing deductible” program. Under these programs, your deductible decreases by a set amount for each year that you are accident and claim free. Some of these programs allow you to lower all of your deductibles, and others only allow you to lower your collision or liability deductible. Different companies offer different amounts of deduction and at different rates. You can compare programs to find one that works well for you.
Another option is to create a plan where you gradually accumulate the amount of your deductible and slowly increase your deductible every six months. Here's how this would work: Let's say your current deductible is $250, which is the lowest amount your company would allow. Now let's say you saved $100 per renewal period by increasing your deductible to $500. If you do this and save the money you saved on your premiums plus your initial $250, you'd have $450 in a year, almost enough to pay your new deductible. You can continue to save money, allowing you to gradually increase your deductible to $750 and then to $1000. You can raise your deductible even higher if your company allows it. As you slowly increase your deductible, your premiums will go down, allowing you to save the money you need to pay the new, higher deductible.
You can also find a company that offers "accident forgiveness." Accident Forgiveness allows you to be "forgiven" for your first no-deductible accident if the total cost of the accident does not exceed a certain dollar amount. This is very useful for saving your deductible if you have a small fender bender. You can also save money and pay for the damage yourself if the accident is very minor; This way you keep your premiums lower by not claiming damage and you don't have unexpected price increases on your car insurance.
You can also lower your deductible by requesting a deductible reduction from your insurance company, which can be offset by other discounts you may be eligible for. If you're not currently taking advantage of all possible discounts, you may be cheating yourself out of savings that could pay off for a lower deductible.
Be sure to consider any separate deductibles that apply to your policy as a whole. If you have full coverage that includes Third Party, Collision Damage Waiver and Collision, you likely have separate deductibles for each policy. Additionally, you likely have a deductible for things like uninsured motorist coverage. Some states legislate the deductible for uninsured motorists; You cannot increase this deductible even if you wish. However, in most states you can pay with your collision and collision damage waiver deductibles and increase or decrease them as you see fit.
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