When starting a new car insurance policy, it is important to shop around for the best rate you can find. Having insurance at a great rate can provide you with a very affordable monthly premium and deductible. Your deductible is the amount of money that you pay before your insurance will kick in and cover the rest of the damages. This amount is negotiated between you and your insurance company when you start your policy. Not set in stone, you may change this deductible amount at any time as long as you inform your insurance provider prior to an accident. The amount you pay for a deductible has a direct effect on how much your monthly premium will be.
First, let’s say your deductible is too high for your income and you are afraid that if you get into an accident you won’t have the money to pay. You call your insurance company and they gladly lower your deductible. There are indeed consequences to taking this route. While on the phone with the company they will take your new deductible amount and figure out how much your new premium payment will be. It will undoubtedly go up. This is because, by paying less in the event of a claim, you are putting more risk on your insurance provider by having them pay for more of the damages. It is up to you to decide if the increase each month is worth paying less in the event of an accident.
Next, we can investigate the opposite approach. Suppose you are a safe driver and feel you pay too much each month on your premium payment. The system works in the opposite way. You can increase your deductible, taking on more risk and financial responsibility when a claim is filed, in order to decrease your monthly payment. Because the insurance company knows they will be paying less in the event of an accident, they charge you less per month.
Putting in the research when making your initial decision about an insurance provider will most likely save you the trouble of worrying about changing your deductible. The idea is to find the company that can provide the lowest rates, ensuring the lowest deductible and premium payments. More often than not, lowering your deductible is not smart. You would be better off putting the amount your premium would increase monthly into a savings account to pay for your next deductible. Though, ultimately, you know what is best for you and with a good amount of research and some online help you can be amply and affordably covered.
