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How to Determine Your Auto Deductible

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When you’re buying an auto insurance policy, your deductible is an important factor. A deductible is the amount of money you will pay out of pocket on any claim before the insurance company covers the rest. Ask yourself how much you feel comfortable covering personally, and that will impact what you pay for your insurance coverage.

What Does Your Budget Look Like?
How much can you afford to cover personally if there is an accident? Consider the amount you would like to pay for your premium. If you want to have a lower premium, the deductible will be higher and vice-versa. You might also have the option to determine the frequency of your payments to make sure that you can handle them. 

Something that might help you with your decision is to consider how much you have in your emergency or savings fund. You can pay a lower premium, but if you get in a car accident, you’ll have a higher deductible. Most insurance policies pay for the amount of damages that exceed your deductible, so having a higher deductible results in more out of pocket expenses for you when claims occur.

Know the Value of Your Vehicle
Check the value of your vehicle before determining your deductible. If you are driving an older car, a high deductible might not be for the best idea. Think about if you totaled the vehicle. Is the high deductible close to what your vehicle is worth? If yes, then you might want to look into a lower deductible.

Who Drives Your Car
You might not be the only person that is on the policy. Is the other person an experienced driver? Did your teenager just get their driver’s license? Do you think that you will be filing a claim often? If so, then lower deductible and higher premiums may be the option for you.

There are many factors to consider when deciding how much your deductible should be. The most important step before you make your decision is to budget for a premium level that is comfortable for you. If you can’t make the decision by yourself, our agents are available to talk through your options.

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