The impact deductibles have on auto insurance premiums

There are many factors that come into play when determining the amount you'll be charged for auto insurance coverage - how much insurance do you want? What is your driving record? What is your deductible?

The latter is the amount of money you agree to pay out-of-pocket when you make a claim covered by your policy. This means, for example, that if the repairs to your vehicle cost $2,000, and you've set your deductible at $500, theoretically $500 is all you'll have to pay toward repairs. The insurance company will take care of the rest.

While setting a lower deductible may seem like a good idea because it means you'll pay less out-of-pocket when you make a claim, it's important to keep in mind the higher you set your deductible, the lower your premiums. So if saving money on auto insurance is a higher priority, you may want to set the deductible higher when requesting car insurance quotes.

But before deciding on a deductible, you may want to take into consideration a number of factors, including your past driving history, how many accidents you typically get into a year, how much you can afford to pay in the event of an accident, etc.

Accidents seem to occur at the most inconvenient times, so if you're on a tight budget a lower deductible may be the way to go. If saving on insurance is a higher priority, however, perhaps you'll want to set your deductible higher and set money aside that would be available to cover the deductible if you need it. That way repairing your car in the event of an accident wouldn't cause a major hardship.

Courtesy of ARAcontent