How To Decide What Deductible Is Right for You
If you are looking at insurance policies, you might have come across a question that says “what would you like your deductible to be?” If this question makes you scratch your head, you are not alone. First, a deductible is the amount of money you have to pay out of pocket before your insurance policy kicks in. While you might be thinking that you want a deductible of zero dollars, this is almost impossible to find and will result in a premium that is much higher. Typical deductibles for insurance policies range from $500 to a few thousand dollars. Therefore, you need to figure out what deductible is right for you.
The Amount of Money You Are Willing to Pay
The most important factor that you need to consider when you are looking at deductibles on insurance policies is the amount of money that you are willing to pay out of pocket. You also need to weigh this against the fact that as the deductible goes down, the premiums are going to go up.
For example, you can probably fix a scratch on your car out of pocket. There is no need. To file an insurance claim to fix such as small ding because this is only going to make your premiums go up. So, how much can you afford to pay out of pocket to fix damage to your car? This is a good starting point.
Factors To Consider
If you have an insurance agent, you can ask him or her to take a look at the numbers. Start by looking at the premiums associated with the highest and lowest deductibles. This will give you some idea of what you’re looking for. Keep in mind that a low insurance premium sounds nice but if the deductible is $10,000, you may never get to use this policy.
Then, you need to think about your driving record. Remember that your insurance policy is going to kick in if you have an accident. If you are a safe driver, there is a very low chance that you will ever need your car insurance to cover the costs of repairs. Therefore, you might want a policy that has a low monthly premium, assuming you will never need to pay the deductible.
On the other hand, if you are a driver who backs into stationary objects on a regular basis, then there is a high chance that you will need your insurance policy. Therefore, you may want to go for a policy with a lower deductible because there is a high chance you will need to pay this amount.
Find the Sweet Spot
In the end, the right deductible depends on a number of factors, including someone’s financial status as well as his or her driving record. It is helpful to talk to an agent to run the numbers.