Raising your deductible (the amount you’re liable for before your insurance takes over) is commonly given as advice when you want to save on automobile insurance premiums. It can help some people, but it’s not always the smart thing to do for everyone. Is it smart for you?
Do you drive a lot of miles every week? Do you drive a sporty car? Are you young (under 25)? If you answered yes to any of those questions, a higher insurance deductible could cost you more money. Those categories are usually charged higher rates by insurance companies for a reason: They show a greater chance of having an accident.
If you’re in one of those categories and you raise your deductible, it’s possible that you could lose money. If you have an accident, the deductible is your responsibility to pay. Don’t raise it unless you have that amount set aside for the purpose of covering any damages before your insurance takes over. If you can easily pay the deductible, of course there won’t be a problem and you can raise it as high as you can afford. It will definitely save you money on your premiums, but each insurance company will have different rates.
Are a you middle aged man or woman, married, and you’ve worked at the same job for the last three years or more and seldom drive over a thousand miles each month?
If you fit that profile or any part of it, you can probably raise your deductible. The chances of an accident are farily low and insurance companies will adjust premiums accordingly. Because your chances are low doesn’t mean you won’t have an accident, so if you think you would have trouble paying the deductible, check to see what the difference in your premiums would be. Your insurance agent will help you find these figures.
You can play the game of chance and raise your deductible while you’re saving that amount, but you could have an accident meantime. It’s much wiser to have a fund set aside to cover the deductible in case of an accident regardless of which category you find yourself in.
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