Drivers could see an immediate 5-10 per cent savings on auto insurance premiums just by raising their deductibles.
Making the difference with deductibles - how it works
A deductible is the portion of an insurance claim you agree to pay. Your insurance company picks up the rest. By agreeing to take on more financial responsibility in the event of a claim, the insurance company considers you less of an insurance risk and will adjust your premiums accordingly. In other words, the higher the deductible you choose, the lower your auto insurance rate.
Why raising deductibles makes sense
In today's insurance climate, many people would not make an auto insurance claim unless they really had to. This is because insurance companies may raise your insurance rates when you have more than one claim on your record.
Insurance companies will determine your auto insurance rate, in part, on the likelihood you will make a future claim. The more claims you have made in the past therefore, indicates you are more likely to make one again. Even if your past claims were only for minor damages, the insurance company will consider you to be a higher risk of making a future claim, big or small.
This is why some people will absorb the cost of small car repairs themselves, rather than involve the insurance company. They keep their claims history clean and save their insurance for when they really need it and can't afford to pay for damages themselves.
Would you make an insurance claim for $700? Probably not if you knew your rates might be affected. Insurance claims stay on your record for up to 10 years and with rate increases, you could be paying far more than $700 over the long run. So, if you wouldn't make an insurance claim for less than, say, $1,000, then why have deductibles lower than $1,000? You might as well raise them as high as you can afford, and enjoy the savings now.
Are your deductibles set to $500 or lower? How much could you save?
Raising your deductibles is one option for you to consider in order to keep your car insurance costs under control. When you compare quotes online at Kanetix, you can change your deductibles to see the impact on your rates. See how much you could be saving now!
Looking for more information about deductibles and your auto insurance?
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