Choosing The Right Deductible For Your Auto Coverage
When buying insurance, it’s important to select a deductible level that works for your needs and your budget. If you choose a low deductible, you’ll end up paying more each month than you would like. If your deductible is too high, you won’t be adequately protected in the event of an accident.
Fortunately, it isn’t too difficult to find a deductible that works for you. If you keep a few key points in mind, the right coverage amount should become quite clear.
Key Idea #1: Mileage Totals
People who drive more frequently are at a higher risk for an auto accident. While this might seem obvious, it’s important to understand how your daily and weekly mileage impacts your decision about a proper deductible. Insurance companies have confirmed that mileage is an accurate predictor of risk. If your occupation requires you to commute or to spend time on the road, you might want to choose a lower deductible.
Key Idea #2: Driving Habits
Is your driving record clean? Typically, a clean driving record allows insurance shoppers to find the lowest rates. However, the reason for this is simple–people with clean records tend to be involved in fewer accidents than riskier drivers. If your driving record is historically spotless, you can probably elect for a higher deductible than if you receive a large number of tickets.
Key Idea #3: Local Population
Densely populated areas tend to have more motorists and more crowded roadways than rural areas. Even though fatal car accident rates are lower in urban areas than in the country, minor accidents are more likely to happen in areas of high population. That means your deductible is more likely to factor into your life in the city than in the country. If you live in a crowded area, you might want to consider a lower deductible.
Key Idea #4: Financial Situation
Deductibles are basically a way to avoid risk. For someone who makes $150,00 each year, a $2,500 deductible is not going to alter their lifestyle in a significant way. On the other hand, if you’re just starting out in life, even a $500 expense could make life difficult. It’s important to have an accurate, honest idea about the level of expense you could successfully withstand based on your savings and income level. If money is tight, choose a lower deductible–even if premiums go up.
If you take these ideas into consideration, choosing the right deductible level for your auto insurance is a snap. You’ll feel comfortable with your monthly payments, and you’ll know that you have the protection you’ll need if an accident shows up in your life.