Deductibles are where a quote can look cheaper while quietly shifting risk onto you.
What a deductible is
A deductible is the amount you pay before your coverage pays the rest. On a covered claim with a 500 dollar deductible and 4,000 dollars of damage, you pay 500 and the policy pays 3,500. The higher your deductible, the lower your premium, because you are keeping more of the small and mid-sized losses yourself.
The deductibles to look for
- Collision deductible. Applies to impact damage to your vehicle.
- Comprehensive deductible. Applies to theft, hail, fire, animal strikes, and other non-collision losses. Often lower than collision.
- Glass deductible. Some policies treat glass separately, occasionally with no deductible.
- PIP or UM property damage deductible. Depending on the state and policy, these may carry their own deductibles.
Higher deductible vs lower premium
Raising a deductible from 500 to 1,000 dollars lowers the premium, but doubles what you pay on the next claim. The math only works if you keep the difference available. A good rule is to set the deductible at the most you could comfortably pay tomorrow if your car were damaged today.
Compare them in dollars
When you compare quotes, line up the deductibles vehicle by vehicle. A cheaper quote that raised your collision deductible from 500 to 1,500 dollars is not 200 dollars cheaper; it is 200 dollars cheaper in exchange for 1,000 dollars more risk on every collision claim. Compare the real numbers, then decide.
Continue the series
You are reading part 7 of How to Compare Auto Insurance Quotes Without Getting Burned.
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