Reader question:

What is the effect on your car insurance premium if you lower your auto insurance deductible?

Amy

Good question, Amy.

The greatness of the effect of a lowering of your car insurance deductible on your premium depends a lot on what good of a driving history you have. For example, someone who has a very good driving record would not have as much of a negative effect from lowering their car insurance deductible as someone who already has a couple of speeding tickets under the belt. Why is that? Mostly it is because the way the car insurance company charges you for your auto insurance premium depends mostly on how likely you are to get into a car accident, so if you have a five hundred dollar deductible for a good driver premium, it’s not as big a deal that they would have to pay more on the off chance that you get into an accident in which you are at fault, because it is very unlikely that you will get into such an accident. Do you see what I mean?

However, it does not matter so much how good your record is if you want to keep your auto insurance premium low, because regardless, if you lower your car insurance deductible then your premiu will go up. It just might go up less if you lower it with a good driving record.

One thing you should remember before lowering your car insurance deductible is that raising the deductible is one of the best ways for you to save money on your car insurance. It is one of the things that I always suggest to people who want to do so. Before you consider lowering your deductible, think about why you are doing it. Do you not want to be inconvenienced out of the higher deductible if you get into an accident? Think about the fact that higher premiums will inconvenience you out of way more money than a one time deductible. Don’t go ahead with lowering your car insurance deductible unless you know for a fact that you would be unable to afford to pay the higher one if you ever got into an at fault car insurance accident.

Cheers,

Fashun Guadarrama.