One of the easiest ways to save money is to adjust insurance deductibles. A deductible, to put it simply, is the money you pay out-of-pocket before your insurance company kicks in and pays its part. When it comes to automobile insurance, or any insurance for that matter, it's critical that you set smart deductibles for yourself.
Yes, there is some guesswork involved. But armed with the right information, you can set the right deductible that protects you against big losses for a reasonable insurance premium. All to often, people chose a deductible because of the result it has on their monthly premiums: the higher the deductible, the lower the premium. While cost is certainly an important consideration, here's some additional information to consider before making your decision.
The Basics of Insurance Deductibles
Generally speaking, you're in control of how much auto insurance you carry. Some minimum amounts of liability are, however, mandated by state law. And if you have borrowed money to purchase your vehicle through a bank or credit union, the lien holder will require that you carry this coverage.
Another basic precept is that auto insurance is a tool to protect you. And everyone has different ideas of how much protection he or she needs — or, risk tolerance. Those who are risk averse are likely to carry a lower deductible. Those with less aversion to risk will typically have higher deductibles. The amount you pay your insurer each month directly correlates to how much risk you are asking them to take on, and how much you are willing to take on yourself.
The more you have to lose, the more protection you'll need. That's the operating statement.
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