There are many considerations to make when you are deciding on the deductible amount on your car insurance. This blog post is part of a two-part article to help you narrow your search down and get the auto insurance package that fits your needs.
Understanding Auto Insurance Deductibles: Part Two
Here is a list of factors to consider in choosing a deductible:
1 – Weighing between Car Insurance and Deductibles
The amount you pay for your insurance each month, or your “premium,” is inversely proportional to your deductible—meaning that as your deductible goes up, your premium decreases, and vice versa. So, if you feel comfortable shouldering the cost of repairs yourself in the event of an accident, you can get insurance with a lower premium by opting for a higher deductible. Conversely, if you would rather not have to pay out of pocket for repairs, you can get insurance with a lower deductible, though your premium will be higher.
2 – How Much You Can Afford
How much you can afford to pay for your insurance each month is another factor that determines the amount of your deductible.
The less money you have available for your monthly premium, the higher your deductible needs to be in order to make your policy affordable. On the other hand, if you have more money to spend each month, you can afford to pay a lower deductible.
3 – Deductible Requirements
Your deductible is the amount of money that you must pay before your insurance policy pays for the rest of the damages. In order to make sure that you are able to pay the deductible, you need to make sure that you keep money saved up in a savings account.
Some deductibles are a set amount, while others are a percentage. In some cases, the percentage can be as high as 5% of the value of your home, so make sure that you are aware of the requirements for the deductible before you sign up for a policy.
4 – Coverage Limits
Coverage limits are the maximum amount that your policy will pay out if you have a covered loss. You need to make sure that the limits are high enough to cover the value of your home and all of your belongings.
If you do not want to pay extra for a higher coverage limit, you can save money by raising the deductible. This will lower the monthly premium, but it will also mean that you will have to pay more out of pocket if you do have a covered loss.
5 – Cancellation Policy
You need to make sure that you understand the cancellation policy for the policy that you are considering. Some companies will charge you a fee for canceling the policy, while others will refund the unused portion of the premium.
You also need to make sure that you know how much notice you need to give before canceling the policy. Some companies require a 30-day notice, while others give you a whole year to cancel.
Looking into these considerations is important before you make your final decision. You want to make sure that the insurance company you work with has a good reputation, is experienced, and has a proven track record. You also want to make sure that they are able to meet your specific needs.
Work with the most reliable auto insurers in Colorado by contacting 5280 Insurance. Let us help you get the right auto insurance today!