McKayla Girardin, Car Insurance Writer
@mckayla_girardin
A $1,000 deductible is better than a $500 deductible because a higher deductible usually lowers your monthly insurance premiums. Switching from a $500 deductible to a $1,000 deductible could save you up to 28 percent on your premiums.
How to Choose Between a $500 and a $1,000 Deductible
Figure out how much you could save on your premium with a $1,000 deductible.
Car insurance companies usually base their quotes on a $500 deductible. You'll need to check how things change with a $1,000 deductible to determine if paying $500 more after an accident is worth the savings.
Consider how much you could afford to pay if an accident happened today.
Accidents can happen at any moment, so if you don’t have a lot of savings or expendable income, a lower deductible is usually a safer choice to avoid financial stress after an accident.
Determine your car’s actual cash value.
If you have an old car that’s only worth $2,500, for example, you probably don’t want to carry a $1,000 deductible. It’s too close to the total value of your vehicle, which means the replacement cost wouldn’t put much more stress on your finances than the deductible itself.
Decide based on your financial situation and preferences.
After evaluating your income, monthly expenses, savings, available credit and car value, it should be clear which is a better deal for you: reducing monthly premiums or saving in the event of an accident.
Although $500 and $1,000 are the most common deductibles, you may want to consider other deductible amounts, too. Some companies offer lower and higher options, such as $100, $250 or $2,500 deductibles.
No matter what you decide, be sure to set aside enough cash to cover your deductible before you need to make a claim. To learn more, check out WalletHub’s guide to car insurance deductibles.
People also ask
What is a deductible in car insurance?
A car insurance deductible is the amount of money you pay out of pocket for a claim before your insurance company will pay for the rest. Many types of car insurance coverage use deductibles, including collision and comprehensive insurance, personal injury protection, and uninsured motorist property damage coverage. The average car insurance deductible is $500, but deductibles can range from $100 to over $2,000.
Key Things to Know About Car Insurance Deductibles
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Is it better to have a higher deductible for car insurance?
It is better to have a higher deductible for car insurance if you want your premium to be as low as possible. Picking a higher deductible generally results in a lower premium because it puts more of the financial burden on you in the event that you need to file a claim. Still, it’s important to choose a deductible you could afford in the event of unexpected damage, because there’s no way to avoid paying...
read full answer by WalletHub, Financial CompanyWhat does it mean when you have a $1,000 deductible?
A $1,000 car insurance deductible means you have to pay $1,000 out of pocket before your insurance company covers the rest of your claim. Your insurer will typically pay the remaining amount directly to you or to a third party, such as a mechanic, after subtracting the $1,000 deductible.
$1,000 Deductible in Car Insurance
Having a $1,000 deductible on your car insurance means you must pay this amount yourself when filing a collision...
read full answer by WalletHub, Financial CompanyDid we answer your question?
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