Considerations to Make Before You Raise Your Deductibles

When families are looking for ways to reduce their spending, they often turn to necessities like car insurance and try to find ways to lower car insurance premiums. Many of them need a certain amount of coverage in order to be compliant with state insurance laws, so their only real option is to increase their deductibles. Deductibles in car insurance are the same as deductibles in health insurance. They represent the amount of money and insured must pay out of their own pocket for expenses that are incurred as the result of a car accident. Since they relieve some of the financial responsibility on the insurer, they result in a reduced premium.

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While it seems like simple logic to decide that reducing your deductibles is the perfect way to save on car insurance, there are some things you should consider before you make the change.

1. Can you afford the deductible?

Having a high deductible to lower car insurance premiums is a great idea--but only if you can afford to pay the deductible after an accident. Make sure you have sufficient resources to pay those deductibles before you commit to them.

2. Do the deductibles reduce your premiums enough?

If your higher deductibles won't have as much of an effect on your premiums, then it is not worth committing to them. Make sure you are saving enough over the course of a year to offset a good portion of your new deductible.