We’ve all had to cut back on expenses. From the credit crisis to the housing market meltdown to the lousy economy and the loss of jobs, many Americans have had to find ways to cut the fat from their household budgets.
Is Decreasing your Auto Insurance Coverage a Good Idea?
In your search for budget cuts, you may have thought about decreasing your auto insurance coverage. Before you do this, you may want to think twice. Auto insurance, like many other types of insurance, may not be something you think too much about until the time comes when you need it. It is therefore best to keep your auto insurance coverage and to always carry what you can comfortably afford.
However, there is one area that you may want to cut back on when it comes to auto insurance: your auto insurance deductible.
The auto insurance deductible you pay when it comes time to file a claim is often a huge indicator of your monthly premium. In other words, the auto insurance deductible you choose has a clear effect on what you pay each month to your auto insurance company.
Does it Pay to Increase your Auto Insurance Deductible?
If you choose to raise your auto insurance premium by as little as $500 and agree to take on more financial responsibility in the event of an auto insurance claim, you can save up to 15 percent on your auto insurance premiums.
Higher deductibles may be particularly appealing to motorists with older vehicles, as they often will not worry about a minor ding or flaw. Individuals with newer vehicles, on the other hand, are probably best served with auto insurance policies with lower deductibles.
In other words, individuals with newer cars will usually be more apt to repair their vehicle in the event of a minor fender bender.
In the end, you must decide which type of auto insurance policy and deductible you will carry. Always keep in mind, however, that you should save at least the amount of your deductible in a savings or money market account in the event of an auto insurance claim so that you won’t be caught off guard.
