The Pros and Cons of Raising Your Car Insurance Deductibles

With more and more people being laid off from their jobs, families are looking for ways to cut their monthly expenses. Normally those in such a situation look to cut the largest costs that they figure are not absolutely necessary. For many this may mean cancelling auto insurance. This is not a good idea, but it does make sense to adjust your auto policy. A good adjustment is to raise your car insurance deductible.

There are several pros to raising your car insurance deductible. It is advantageous because it will decrease the amount of the premium being charged.

For instance, you may currently pay $150 a month for your car insurance. The deductible, should there be a covered accident, is $250. If you raise your deductible to $1000, your monthly premium would be reduced to $75, saving you $75 a month.

Not all solutions are without problems. One of the cons of raising your car insurance deductible would be in the case that you actually have an accident. If you have raised your car insurance deductible in order to save money and have an accident, you must pay $1,000 in order to get the car repaired. It may be much harder to come up with the $1,000 needed to get the car repaired than the $250 deductible you would have paid with the higher premiums.

It is always good to keep in mind that this deductible also applies if your car is stolen, a tree falls on it, or it is damaged because of any other natural or unnatural disaster.

If raising your car insurance deductible sounds like something that you are interested in doing, it is advised that once your financial situation has returned to normal you adjust your deductibles to something that is more manageable.

Source:

Christine Dugas, "Before you cut back insurance, consider discounts, adjustments", USAToday.com