What Happens To An Auto Insurance Premium When A Deductible Is Lowered?
Learn important information about what happens to an auto insurance premium when a deductible is lowered. Will the auto insurance premium be raised?
Just as with most insurance, an auto insurance premium will generally go up when a deductible is lowered. In contrast, if a higher deductible is selected, the insurance premium will be lower. To fully understand what happens to an auto insurance premium when a deductible is lowered, it is important to understand your car insurance company’s procedures for determining deductible amounts and premium rates on auto insurance.
What is a Deductible?
The deductible on your auto insurance policy is the amount of money you will be responsible for in the event of an at-fault accident before the insurance company pays your claim. Once you have paid the deductible, the auto insurance company will pay the rest of the expenses. For example, if you are in an at-fault accident and the damages to your car result in $1000, and your deductible is $250, you will be required to pay the $250 deductible before the insurance company will pay the remaining $750. When selecting your deductible price, it is important to keep in mind that your premiums will be directly affected by the amount of the deductible.
How is my Premium Payment Affected by my Deductible?
A premium is directly affected by the amount of the deductible in that the higher the deductible amount you select, the less your premium payments will be. Alternately, the lower the deductible, the higher the premium payments will be.
How to Select Deductible and Premium Amounts
When selecting your deductible and premium amounts, keep in mind how much out-of-pocket expenses you will be willing to pay in the event of an accident, as well as the amount of premium payments you are capable of paying.
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