From $250 deductible to $500 deductible – Lowering Your Auto Insurance Premium

From $250 deductible to $500 deductible – Lowering Your Auto Insurance Premium

January is here and with a new year comes…your auto insurance renewal. Yep, it’s not exciting and it may not be very pretty, but it needs to be done. Here’s a quick tip to help make that premium look a little better.

Take a look at your 6 month policy premium breakdown and you’ll see that “Collision” is probably the largest portion of your premium. So, if you’re going to see a lower price, saving money here will make the biggest impact.

The #1 reason for higher premiums are lower deductibles (driving records and coverage limits being equal). What this essentially means is that if you’re going with a $250 deductible you’ve agreed to pay up to $250, no more, to cover any damage. The insurance companies are happy to offer this coverage, for a higher price of course. If you can afford to raise the deductible to $500 you could see a substantial savings, raise it to $1,000 and it will be even more.

Let’s put it this way. The insurance company is going to get the price difference one way or another. If you have a $250 deductible, chances are collision is costing you over $400 (Average consumer pays over $800/yr for car insurance) and if you haven’t made a claim, that’s $400 profit for the insurance company every year. If you raise your deductible to $500 or $1,000 then that $400 will start to shrink and you’ll be saving month after month instead of paying more for the option to pay $250 instead of $500, or $1,000.

Raising your deductible means you will have to pay the amount you agree too $250, $500, or $1,000 – but, if you can set aside that money, you’ll find that over the course of a year or two you’ll probably save that much on you premium.

Make sure you talk to your insurance company about raising your deductible, talk to a licensed insurance agent and make an informed decision before changing your auto insurance plan.