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Article 4 of 4 in How Rates are Determined |
Is it better to have higher or lower deductibles on my policy? |
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This is a personal preference. Higher deductibles generally mean lower overall costs for your insurance policy because you will pay more out of your own pocket when you file a claim. Lower deductibles generally mean higher overall costs for insurance because you will pay less out of your own pocket when filing a claim.
Factors to consider. If you have been in multiple accidents, do a significant amount of driving or live in an urban area where accidents or theft are more common, you may want to consider having a lower deductible as there is a higher likelihood of incident. If you live in a rural area, or do not do a significant amount of driving, you may want to opt for a higher deductible as there is a lesser likelihood of incident.
It boils down to risk. Take a good look at your policy record over the last few years to decide how much of a deductible to carry and to assess what amount of risk you are willing to take. If you’ve been driving for years without incident, the likelihood of an incident is lower. If you’ve experienced several incidents within the last few years, the likelihood of another incident is higher. Ultimately, it boils down to the amount of risk you are willing to live with.
Compare before purchasing. It is wise to compare the differences in insurance rates before deciding on deductible amounts as the rate difference between deductibles may be substantial with some insurers and quite insubstantial with others. Shop around, compare and educate yourself to save the most money!
Click here for other factors that lower car insurance rates. |
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