auto insurance deductible

We would all like to save money when it comes to buying auto insurance, but, as my mother always told me, don’t be penny-wise and pound foolish.  If you have never purchased auto insurance before, or even if you have, you should be aware that one of the important decisions you will have to make is at what dollar amount to set your collision and comprehensive deductibles.  For these two types of coverage, the deductible amounts will be a determining factor in how much your premium is. 

A central rule to remember with auto insurance is: the higher the deductible, the lower the premium–but the more you’ll pay out of pocket in case of a claim; the lower the deductible, the higher the premium–but the less you’ll fork over if you have an insured claim.

All auto insurance policies that cover collision and/or comprehensive have a deductible. The deductible is the part of your policy that you are responsible for paying. Auto insurance policies don’t simply take care of all of your damages or expenses. You are required to pay for some of the damages, but that amount depends on your deductible. Deductibles vary by state, but are most often in amounts of $100, $200, $500 or $1,000. How does it work?  If you are in an accident that causes $3000 worth of damage to your car, and your deductible is $500, you are required to pay the $500 and the insurance company will take care of the remaining $2,500.   If you carried a $100 deductible, you would pay the first $100, and then your insurance would pony up the remaining $2,400.

How to decide
It’s not always easy to decide how much you are willing to pay now (for your premium) versus later (for your deductible) should you need to make a claim.   Some of the factors to take into consideration are your:

•    income
•    credit
•    savings
•    comfort level
•    age of your car
•    driving history
•    premiums

Think about your household income, credit available and your personal savings. If you were to experience a car accident today- what amount of money would you feel comfortable paying as your deductible?  In other words, what do you have in the bank or available on your credit card, and how much can you get your hands on if you need to that won’t have a huge impact on you or your family?  If your current deductible is higher than that amount–make it lower! If you could easily afford to pay more–you might want to increase your deductible in order to lower auto premium.

Much of it has to do with risk.  Are you willing to take the risk by having a large deductible that you won’t have an accident, or if you do, that you’ll be prepared to cover that amount?  Are you comfortable with that, or are you going to fret over it? 
So you see that which option you choose (high deductible/lower rates or low deductible/higher rates) will depend on what you can afford, but it also depends on how often you expect to need your insurance.  While no one expects to have an accident, you know your driving history; if you tend to have a fender-bender of some sort every few months, you will likely want to pay the minimum amount and let the insurance company take on the majority of costs. For safer drivers who have an excellent driving record, it makes sense to go with the higher deductible and pay lower premiums instead.

Questions to ask yourself
Every so often, make sure to review your auto insurance deductible and consider these two questions:
•    Has my household income changed since I set this deductible?
•    Does this deductible still reflect the amount of money I would be able to pay in the event of a claim?

Purchasing car insurance doesn’t have to be confusing. Take the time to go over the numbers and figure out what you would be able to afford out of pocket in case of an accident and how much you can afford to pay on a monthly basis. A little research can go a long way. It’s also helpful to speak with the auto insurance agent who can give you a good idea of what the norm would be for your car’s age and your driving experience.

Lori Mandell is an attorney, writer and editor. Her specialty areas include insurance, personal injury and estate matters.

hanley ramirez : What are some of the common questions or tips to calculate your savings on cars and auto insurance, especially when buying a car for a teen.

Calculate Your Savings on Cars and Auto Insurance

There are lots of things to consider when you buy a car for your teen. Obviously teen safety is the prime consideration, On this site, you would find all your answers. However here are some common questions which I have answered for you.

Trying to save money on cars and auto insurance often means asking some tough questions about cutting costs or spending more. Should you follow these “tips” or save your time and money?

Should you: Raise your deductibles for comprehensive and collision coverage?
Quick answer: It really depends.

When it comes to saving money on car insurance, how do you figure out whether you should give up a little coverage or pay a little more for a lower deductible?

The effect of raising or lowering deductibles for comprehensive and collision coverages varies between car insurance companies and is different for each situation, so there is no “quick answer” to this question. Until you see actual prices for different deductibles, you won’t know whether it’s worth it.

The price of your car, the cost to repair your car, how likely it is to be stolen, and where you live (city, suburb or the country) can all affect the final price you pay for car insurance. If you’re paying a lot, you can save more. If your rates are relatively low, it’s harder to squeeze out savings by simply raising your comprehensive and collision deductibles.

The average driver has a Comp or collision loss every seven to 10 years. If you can save $75 each year by raising your collision deductible from $500 to $1000, and you don’t have a collision loss for 10 years, you will have saved $750 in premium payments – but would pay an additional $500 deductible if you have an accident. Net savings: $250.

To see how your rates compare to average quotes in your area, check out our RateWatch for Car Insurance. If you’re paying more than the average driver in your area, it’s a good idea to compare rates and consider higher deductibles.

Should you: Get a vehicle history report before you buy a used car?
Quick answer: Yes.

This decision is easy. Always get a vehicle history report on a used car before you buy it, (unless it’s the car your grandmother drove only to church for the past 10 years). Some sellers and dealers offer these reports as a selling point – and be sure to check it thoroughly to make sure it matches the dealer’s description. A vehicle history report is a relatively cheap way to make sure you’re not making an avoidable mistake.

The largest provider of vehicle history reports, Carfax, charges around $30 for a single report, $35 for 10, and $40 for as many as you want in a month. A typical report includes accidents, recalls, current mileage, number and type of owners, suspicious odometer readings, whether the car was totaled or turned in as a lemon, and more. Some providers, such as Carfax, have even started to include service records.

In addition to getting an official vehicle history, check online ratings for safety and read consumer reviews about service issues. The good news about buying a car is that it’s easier than ever to spot potential problems!

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Should you: Buy an extended warranty for a new or used car?
Quick answer: Do the math and be careful.

In this economy, people are more likely to buy a used car than a new one, and that raises the question of protecting your investment with an extended warranty. One option is to buy a certified used car, which means that the car has been inspected thoroughly and the manufacturer has extended its own original warranty to cover the car for an additional period. If the terms are the same as a new car warranty, this option is often worth the additional price, because it means you won’t pay for repairs to faulty parts, the same as with a new car.

Some dealerships will offer an aftermarket warranty from a third-party provider, which may be an insurance company or a warranty company. Make sure you compare prices for different protection levels and deductible amounts. And, be aware that some companies will make you pay for repairs out of pocket and reimburse you later. Some warranty contracts will insist on approving repairs or repair shops before work can be started, and some deductibles will apply on a per part basis, rather than a per visit basis. These differences could be key if you’re comparing two warranties that are otherwise similar. If the cost seems high and the actual coverage looks limited, you might want to save your money.

auto insurance comphrensive coverage

3) Auto Insurance Liability Coverage

These vary based on what they protect and cost. It is best now to get a quick and accurate estimate of what these types of insurance will cost you individually. The quickest and easiest way to do this is to simply get an free online auto insurance quote. Below is a description of what each type of insurance covers.

Auto Insurance Comprehensive Coverage covers damages to your car that are not caused by other motorists. These damages include, fire, theft (of the whole car, or parts of it i.e. Stereo, Rims), damage from acts of God, such as ice storms, tornado, hail and floods. Lastly it covers if you hit a deer, or if your vehicle gets vandalized.
This type of coverage is optional and should only be purchased if your vehicle is worth more then $1000. Auto insurance comprehensive coverage does not raise the premium very much, and you can choose deductible amounts of $250, $500, and $1000. It’s best to go with the $250 deductible, as the higher deductibles, don’t lower your premium enough to be worthwhile.
Comphrensive coverage is becoming more and more important for USA because of the change in cliamatic conditions and the rising catastrophic losses from cyclones, wind storms, flood, hail and earthquakes. All these are covered under a comphrensive insurance and no other coverage.

Collision coverage covers your own car, when you encounter physical damage to it, as a result of a collision. So if you crash into a light post, or hit another car, this insurance will pay to fix YOUR car.
Again this coverage is optional and the deductibles range from $250, $500, and $1000, and if your car is worth more then $4000, I urge you to get this coverage, so if you are ever involved in a accident, you won’t be left with a large bill to fix your car.

Liability coverage is different from comprehensive and collision coverage, in that you are required by law to have a minimum amount in most states and provinces. Whenever you drive a car, you are capable of causing damage, to property or to other persons. Since most people don’t have the money to cover these damages, governments require drivers to have liability insurance that will cover any losses that you cause on anyone or their property.
While you are driving, if you cause an accident, your insurance company will pay for anything you damage and for the medical bills for anyone you injure. They will cover the expenses, up to a maximum limit that you agree for when you purchase the insurance policy. This limit can be anywhere from $50,000 to $1 million, depending on where you live. The amount of maximum liability coverage, will affect the amount you pay per year (your premium), with a smaller maximum liability, leading to a smaller premium.

However, it is not smart to save a couple dollars here by skimping on your maximum liability coverage, as any damages over your limit, will be your responsibility to pay. That means if you only have $50,000 liability, and you cause $60,000 worth of damage and medical bills, you will be on the hook for the other $10,000!!!

It is best to have at least $500,000 or $1,000,000 liability, that way you will surely be able to cover all damages and expenses you cause.

Get the optimum coverage at the same time the best car insurance and cheap auto insurance coverage get them now.

When you ask a teenagers what’s this something that they wanted to own, majority of them would have one answer- a car. Of course before one can have his or her car or at least drive their parent’s car, he needs to have the driver’s license first which is seen by young people as their gateway to freedom. Teenagers of today are actually lucky because they can have their own cars at an early age (with their parents’ resources of course). For parents who are considering of giving their teenage kids a car, they should also think of getting a car insurance for them.

When looking for teenage car insurance, the premium cost is the very prime concern. Universally, car insurance companies give more expensive insurance premium for teenagers and this is due to the fact that majority of teenage drivers are more prone to accident and risks. But the good news is that parents can have a car insurance for their teen kids at a lesser charge. If you are one among the many parents who is considering of getting a teen auto insurance for your teenage kids then you should be aware of the factors which can possibly help you get a better offer and premium.

Inculcate into your child’s mind the importance of having a clean driving record. Explain to them the benefits of following each and every traffic rule. Avoid traffic violations like over speeding. A good driving history is your passport to getting a lower premium cost.

With al the threats to security that we all are exposed into, it is recommended that you get a car for your teenage kids with excellent safety features. Also, avoid buying them ‘hot cars’ or those which attract car thieves so easily. Car insurance companies give lower premium rates to cars with high security features for they have lower risks of getting stolen.

Go for car insurance with higher deductibles for insurance companies more often than not gives a lower premium for policies with higher deductibles.

Get your child a stand-alone insurance policy to teach him the value of responsibility; that his insurance is his own responsibility. Part of this responsibility is following the guidelines and restrictions of his driver’s license.

As a parent, it is not just your responsibility to buy your kids nice cars and pay for their car insurance; it is also your responsibility to teach them how to be a law-abiding driver.

Insurance carriers use a variety of reasons to raise your teen auto insurance premiums . These include cost of business increases, changes in risk, and your driving or claim history to name a few. There are a few things that you can do in order to combat the premium increase.

This is something you need to worry but deal with in the right way. Take the following steps.

1. Call the insurer. Ask them why the premium has increased and what they can do to decrease the cost of your policy. Beware though, this may involve the representative trying to lower your premiums by altering or dropping coverage that might not benefit you in the long run.

2. Avoid accidents and tickets. This is an obvious one, but the most common reason a policy premium increases is an at-fautl accident, a ticket or moving violation.

3. Raise your deductibles . A basic step that you can use to lower your premiums  is to raise the deductible on your comprehensive and collision insurance. Keep in mind though, that this can hurt you in the long run if you can’t afford the higher out of pocket expense if you do have an accident.

4. Change Insurance Companies. This is one thing most insurance companies hate to hear and sometimes they will work with you a little in order to retain you as a customer. It takes an insurance company, on average 2-3 years to make your policy profitable and the longer you are a policy holder without a claim; the more profitable you are to them. As a result, it is usually in the best interest to try and keep you as a policy holder.

5. Lower or drop your coverage. This is another way to lower your premiums but not something I would advise since it lowers the amount of protection the insurance company will provide you if an accident does occur.

6. Drive your car less. In several states, your premium is partially based on the number of miles you drive yearly. The average is usually between 12,000 to 15,000 miles per year. If you drive less, inform your insurance company and they should be able to provide you auto insruance rates that reflect your lower than average yearly mileage.

7. Drive an older vehicle. As a car gets older, the premium goes down. Avoid purchasing a new car  if you don’t need it because your premium will most likely go up if you acquire a newer vehicle. You can get a car insurance loan also easily.

8. Drop your collision and/or comprehensive coverage on an older vehicle. If you have a car that isn’t worth much, look to see what you are paying for the coverage. If you are driving a 15 year old Honda Civic, the value of the car may not be high enough to justify having the coverage on there since you will still need to pay the deductible before the insurance company will step in and pay for repairs. Add up the cost of the premium and deductible and compare that cost to the value of the vehicle as a beginning measure.

9. Are you getting all your car insruance discounts?  Find out if the increase was because the insurance company took off a teen auto insurance discounts  because they hadn’t received the information needed. Did you forget to send in your son or daughter’s school grades and lost the “good student discount”? Did you change insurance companies on a different policy?

10. Do all people listed on your policy operate your vehicle? Most insurance companies ask for you to list all persons close to driving age or of driving age on your policy. If these people do not operate your vehicle, you can exclude them. This means that they will not be covered by your policy if they operate your vehicle.

Last but not least and most important compare teen auto insurance or young drivers car insurance here.