Simply put, your auto insurance deductible is the amount of money that you are responsible at the time you make a claim for an accident or damage to your car. This amount can vary greatly from coverage plan to coverage plan and usually goes anywhere from $0 to $5,000. Any amount higher than that and you have to start questioning why you have car insurance at all.
Lower Monthly Insurance Fees Mean Higher Car Insurance Deductibles
Most people get higher car insurance deductibles with their auto insurance plans in order to lower the amount of their monthly premiums. But you have to always keep in mind that the auto insurance deductible is the amount of money you will need to come up with once you make your claim in order to have your vehicle repaired. If you know you are never going to have $5,000 in an emergency fund at all times then don’t make your car insurance deductible high. It’s quite simple.
Balancing your monthly budgetary needs with a realistic auto insurance deductible is probably the trickiest aspect of setting up your own car insurance plan. You will need to figure out your auto insurance deductible rate for all of your coverage, including collision, comprehensive, bodily injury, personal property, liability and underinsured/uninsured motorist policies.
It is a bit like gambling because you never know which of these coverages you are going to need in case of an accident. Whenever you make a claim against your auto insurance, unless you are committing insurance fraud, it is never because of an event you planned to happen. It is always because of a highly traumatic and unexpected event. So be aware you will need to have some savings set aside at all times in case you need to cover one of your auto insurance deductibles.
Having an auto accident is something no one likes to think about but try to get an auto insurance deductible that you can afford. It is the wisest way to protect yourself against the unexpected.