How Can You Lower Your Auto Insurance Deductible?

How Can You Lower Your Auto Insurance Deductible?

Many people raise their car insurance deductibles to have more affordable car insurance premiums. By doubling your sum insured, you can reduce up to 40% of the cost of your premiums.

However, this is only a good idea if you have money set aside to pay your deductible if you are involved in an at-fault accident. If you don’t have easy access to this money, you may not be able to pay your share of the repair bills and your car may not be fixed in time. Even worse, you may be required to pay for some of the damage to someone else’s property and be unable to do so. Many people without large cash reserves must keep deductibles low. To do so, however, they often have to pay higher premiums.

Is there a way to lower your deductible and still keep your premiums manageable?

There are several ways you can achieve this goal. Each method requires some planning and discipline, but each can be achieved by anyone looking for a low deductible and low premium.

First, you can choose to insure yourself with a company that offers a “disappearing deductible” program. Under these programs, your deductible is reduced by a certain amount each year you are accident-free and claim-free. Some of these programs allow you to reduce all of your deductibles, and some only allow you to reduce your collision or liability deductibles. Different companies offer different deductible amounts and at different rates. You can compare programs to find the one that works well for you.

Another option is to create a plan where you gradually save your deductible while slowly increasing your deductible every six months. Here’s how this will work: Let’s say your current deductible is $250, the lowest your company allows. Now let’s say you would save $100 per renewal period by raising your deductible to $500. If you do that and save the money you saved from your premiums plus your original $250, you’ll have $450 in one year, almost enough to pay your new deductible. You can continue to save money so that you gradually increase your deductible to $750, then $1,000. You can even choose to increase your deductible higher than that if your company allows you to do so. As you slowly increase your deductible, your premiums will decrease, allowing you to save the money you’ll need to pay the new, higher deductible.

You can also find a company that offers “accident forgiveness”. With accident forgiveness, you can get “forgiveness” for your first accident without a deductible if the accident does not exceed a certain dollar amount as a total cost. This is very helpful to save your deductible fund if you have a minor fender bender. You can also save money and pay for the damage yourself if the accident is very minor; that way, by not making a claim, you keep your premiums lower and don’t have unexpected increases in the cost of your car insurance.

Other ways you can lower your deductible is to apply for a deductible reduction with your insurance company, which may be offset by other discounts you may be eligible for. If you’re not taking advantage of all possible discounts right now, you could be cheating yourself of savings that could pay for a lower deductible.

Be sure to consider any separate deductibles that apply to your policy as a whole. If you have comprehensive coverage, which includes liability, comprehensive and collision coverage, you probably have separate deductibles for each policy. In addition, you probably have a deductible for things like uninsured motorist coverage. Some states set the deductible for uninsured motorist coverage by law; you can’t take this deduction even if you want to. However, most states allow you to pay the deductibles on your collision and comprehensive policies, raising or lowering them as you see fit.

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