There is perhaps no greater influence on car insurance quotes than the deductible you choose for comprehensive and collision coverage for your vehicle. The lowest most companies will offer is $250 and that can range up to $1,000 or more. Similar to high-deductible health insurance plans, you need to weigh a number of factors, ranging from your own cashflow to the value of your vehicle to the replacement costs. Yet many people seem to not realize that doing some math on your own can pay big dividends down the line.
Car Insurance Deductibles and Cash Flow
Many people choose higher deductibles to pay when they are choosing comprehensive and collision coverage in order to not pay hundreds of dollars extra per year on their premiums. If you are financially stable and build up savings, that's perfectly fine and you often end up on the winning end. Most people do not use the savings they gain to start up a bank account that will help smooth out the costs of a deductible when they get into an accident, just like many do not put the equivalent of a monthly car payment into savings after a vehicle has been paid off. In that case, you need to gauge your regular cash flow relative to deductibles to see if you'd be facing a major financial crisis just to pay the deductible.
The Relative Value of Your Vehicle
There are a number of states, including Florida, that do not require regular inspections of one's vehicles. That means that much older cars can still be put on the road. Obviously, their actual cash value (ACV) will be much lower than a car you recently bought or leased. In that case high comprehensive and collision deductibles may represent a significant fraction of the value of the vehicle. Using sites like Edmunds.com or Kelley Blue Book will help you determine the value. If it's close to the deductible, it may not even be worth getting coverage.
Probability of an Accident/Weather Damage Versus Deductibles
According to Esurance, someone whose car received damage from a fallen tree or similar event would pay $84 more per year if they filed a claim on a $100 deductible. Depnding on when the rate decreased, in two years the increase would cover the cost of a $250 deductible.
If you have a long history of being on the road, you can compare how often you have gotten into an accident to the deductibles. According to Census figures from 2009, 16,500,000 drivers got into car accidents out of a total of 211 million drivers. While state to state data can vary considerably, that still means that your likelihood of being a part of a car crash is less than 1 percent for any given year. If your driving habits put you at more risk, than lower deductibles may be worthwhile. However, being on the road is more safe than many people realize and lead them to unnecessarily choose low deductibles when they research car insurance quotes.
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