Auto Insurance Deductible A 'What-if' Discussion ou've heard this before: If you raise your deductible on your auto insurance, you will lower your premium. Just don't raise it so high that, should you have an accident, you can't cover your part of the cost. Call your agent and find out what the difference would be for a year, then make your decision based on how much you'd have to add to that (if any) to make up the difference. For instance, if, by changing your deductible from $250 to $500, you could save $50 every three months, you would save $200 a year. Reality Check: If you had an accident at the end of the first year, you would pay more by having a $500 deductible instead of $250 if you could save $50 every three months. How? At $250 for three months, your coverage will cost you ,000 a year. An accident in which you pay $250 in repairs makes the total 250. If you had a $500 deductible and your premium was $200 ($50 less) for three months, you would pay $800 in premiums and $500 in repairs, a total of 300. However, if you had an accident at the end of two years, you would have paid premiums of $2,000, plus $250 in repairs, making your cost $2,250, in our theoretical case of $250 deductible. At $500 deductible, premiums for two years would be 600, plus $500 in repairs, for a total of $2,100, a savings of 50 total, or $75 a year. Let's take it one more year. At $3,000 worth of premiums for three years, and $250 for repairs, we're facing off $3,250 against $2400 in premiumns plus $500 for repairs...,$2,950 - $300 savings, or 00 a year. 'What-if' nothing changed, but you had an accident at the end of 10 years? You would average a savings of one hundred seventy five dollars a year, still not the 200 it looked like at first. Is it worth it? Take into consideration your (and anyone else's who drives under this policy) driving habits and statistics. Auto Insurance has a list of things to consider such as age, type of vehicle and so on. Keep in mind though, that if the chances of being in an accident are one in a hundred, that one chance still exists! For other articles not listed in the main features, see More From Your Guide
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