No matter what kind of insurance you need, saving money is at the top of everyone’s list when choosing insurance coverage. Several things affect your insurance rates, and one of them is the amount of the deductible you choose for your policy. Choosing the right deductible is crucial to ensure it is the right financial decision for you since this can significantly increase or decrease your insurance rates and out of pocket expenses.
How to Choose the Right Deductible
Your lifestyle and budget best determine the key to selecting the right insurance deductible for you. Many choose a higher deductible to lower their insurance rates. The rates are lower because the insurer will have less money to pay in the event of a claim. This is not the right choice for everyone. A lower monthly premium is nice, however, the money you save on lesser payments means you will end up paying more when you file a claim.
Never choose a higher deductible assuming that you will never have to file a claim. You simply cannot control what happens and this may leave you in a financial crisis. Consider your budget and decide the maximum amount of money you can comfortably afford without it being a financial burden.
It is also important to note that you will only be covered for whatever your policy includes, no matter what deductible amount you choose. It is critical to review not only your deductible but your specific coverage when selecting an insurance policy.
How Deductibles Affect Monthly Insurance Costs
While it is a personal decision for everyone, there is some simple math to help you calculate property insurance cost and savings. Costs and savings vary by insurance category. Here are some helpful examples:
- Home Insurance – The premium rates for insurance on your home do not fluctuate too much when you raise/lower the deductible. Typical savings of around $100 a year are seen by switching from a $500 to a $1,000 deductible. The savings are negligible, so taking the lower deductible makes more sense.
- Auto Insurance – You may not see much of a reduction in the premium rates for an auto insurance policy, either. With auto insurance, to save money, it makes more sense to keep lower deductibles on comprehensive insurance, which covers things like natural disasters and theft, while raising the deductible on collision coverage.
At Schertz Insurance Agency in Denton, TX we serve clients throughout the state of Texas, giving each one of our clients a dedicated team of experts that work together to proficiently address all concerns. We offer all types of insurance coverage to our clients in Texas including Auto Insurance, Business Insurance, Homeowners Insurance, Boat & Watercraft, ATV, and Collector Car Insurance.
Contact us at 940-891-4803 or submit our quick online quote form for a convenient and affordable solution for all your insurance needs.