What Should My Deductible Be For My Low Cost Auto Insurance?

By: David Schneider, Car Insurance Expert
CheaperCarInsurance.com

If you’re shopping for low cost auto insurance on our site, you probably have questions about how big or small your deductible should be. It’s understandable. On the one hand, if you have a high deductible, you can save money on your car insurance. On the other hand, you might not be able to pay the high deductible of $1000 or more if you get into an accident.

There’s no easy answer, unfortunately. The deductible you choose will depend on:

• Your budget for monthly insurance payments
• Your savings, should you need to pay for your deductible for an accident
• Your auto insurance coverage

Deductibles Defined

Let’s back up a minute and make sure you understand what a deductible is. When you have low cost auto insurance, you are responsible for paying a certain amount to repair your car under the comprehensive and/or collision portion of your policy before the insurance company will pay the rest. This is your deductible.

Your deductible can be anywhere from $250 to $1500. As we mentioned, the higher your deductible, the less you pay for your car insurance. You’ll pay more for your insurance if you have a lower deductible, but if and when it comes time to pay it to get your car repaired, you’ll be glad to only pay $250 rather than $1500, especially if you don’t have that kind of money lying around.

Here’s an example. If you’re in an accident, and damages to your car are $2000, if your deductible is $500, you must pay this before your car insurance company will pay the remaining $1500. If your deductible is $1500, you must pay this first, and your insurance company will only pay $500.

Some of the types of incidents that you have to pay a deductible on are:

• Damage from a collision
• An animal hitting your car
• Theft
• Vandalism
• Ice, wind, hail, tornado or hurricane damage

Choosing the Right Deductible

When buying your low cost auto insurance, it’s best to pick a middle of the road amount for your deductible. This way, your rate won’t be too high, nor will you be faced with a huge bill come time to pay your deductible for repairs.

It’s a good idea to put the amount of the deductible away in a savings account so you have it available when you need it (which never turns out to be a “good time.”). If you have $1500, sock it away and choose the high deductible option. If you have $50, choose a middle of the road or lower deductible and put away $10 to $20 every week or so until you have the deductible amount where you can access it to pay your deductible.

If you drive an older car that is paid off, you may want to go with a high deductible. The reason for this is that the value of the vehicle may in fact be lower than the damages. If you have damages that will cost $2000, but the car is only worth $1500, your insurance company will probably mark it off as totaled and give you the remaining value of the car in cash. When you are required to have a deductible, go with the highest one in this case to save money. If the car gets damaged, you may want to pay out of pocket or sell it.

Start Shopping Now

Now that you know more about choosing the right deductible on your low cost auto insurance, get a free quote from our insurance partners to see what deductible options you have.

Posted: January 14, 2010