One of the best ways to save money on auto insurance is also one of the easiest: raise your insurance deductible! In fact, increasing your insurance deductibles from $250 to $1,000 could reduce your comprehensive and collision premium by as much as 40 percent.*Request a free auto insurance comparison →
Your insurance deductible is the amount you must pay before your insurance policy covers any costs associated with an accident. For example, if your deductible is $500 and you're involved in an accident that causes $1,500 worth of damage, you are required to pay $500 before your insurance company will cover the remaining $1,000. Deductibles are usually $100, $250, $500, or $1,000.
If you’re able to raise your insurance deductible, it could save you a bundle. According to the Insurance Information Institute, increasing your deductible from $500 to $1,000 could save you as much as 15 percent on your auto insurance premium. Assuming you pay $700 annually for auto insurance, you would stand to save over $100 per year.
Even better, if your deductible is $250, raising it to $1,000 can save between 25 and 40 percent on your collision and comprehensive premium! With a higher insurance deductible, you will have higher out-of-pocket costs should you need to file a claim, but it may be a good idea to save money on your overall policy rather than per incident.
When you are deciding on your insurance deductible, a general rule of thumb to remember is to choose the highest insurance deductible amount you can afford. If you can only afford a $500 deductible, don’t choose a $1,000 deductible in hopes of saving money on your auto insurance policy. If you were to get into an accident, you will have to pay the $1,000 deductible before your auto insurance would kick in.
Choosing the first auto insurance policy that you find may be the fastest way to shop, but it's far from the best. Comparing quotes from multiple companies for free at InsWeb.com is a great way to make sure you find the most affordable rate.
*Insurance Information Institute