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Choosing The Coverage Amounts And Proper Deductibles

When applying for a policy, it is necessary that you make certain choices regarding the amount of insurance you wish to purchase. The law requires minimum coverage in specific areas, but you always retain the right to increase that coverage to higher limits as a means of controlling your personal financial risk should a serious accident occur. Read also: How to get discounts on your car insurance.

How to Choose Your Car Insurance Deductible

Auto policies have often been the cause of bankruptcy for people who weren’t adequately insured. In an effort to avoid anything like this happening to you, consider what policy amounts would make you feel comfortable that you have purchased sufficient coverage.

Always ask your insurance professional for rate quotes for these different amounts, even if you are not sure you can afford them. The reason is that increased coverage does not cost much more than the minimum. It is actually surprising that for a small increase in premium you can obtain considerably more insurance value. Read also: Finding The Cheapest Insurance Rates.

It is usually advised that you maintain the same amount of liability on all of your policies. After all, you should arrive at this specific amount by evaluating your assets and ability to pay a claim should it be necessary. This claim could well be generated by either your automobile insurance or your homeowner’s policy. Since either claim could jeopardize your financial future, it makes sense to cover the similar exposure with the identical amount of insurance.

Also, remember, when purchasing Uninsured/Underinsured Motorist coverage, this policy is covering you and your injuries and damage done to your property. With that thought in mind, do consider raising this from the minimum required by law, so that you and your family will be protected in case of an accident with someone who is uninsured or not adequately covered.

Insurance deductibles are applied to the Collision and Comprehensive portion of your policy. Increasing your deductibles is a great way to lower your premiums. Most agents immediately suggest this as a way to lower premiums.

The problem is that this is only a valid option if you can afford to pay the deductible when your vehicle becomes damaged. If this would be a terrible hardship, do not trade-off for the lower premiums. If you would like to take advantage of this opportunity to save money, consider starting a small bank account solely to be used to pay off your deductible in the event of damage. Make small deposits into this account while carrying the lower deductible. Once you have saved enough money to justify a higher deductible amount, you will be able to begin enjoying the savings on your policy. Read also: What are the differences in auto insurance between states?

If you never have an accident, you will have benefited from many years of savings on your premium and would still have the deductible amount in your account earning interest. This could be extremely beneficial over the many years that you will own an automobile policy.

Some insurance companies will reward good driving records with reduced collision deductibles. This means that they will lower your deductible by a specific dollar amount without additional premium. This, in turn, lowers your personal exposure in case of an accident.


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