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7440 Heritage Village Plaza, Gainesville, VA 20155

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7900 Sudley Road, Manassas, VA 20109

(703) 257-2820

Freeman & Sherburne, Inc. [Businessowners Elite]

7440 Heritage Village Plaza, Gainesville, VA 20155
(703) 938-8070

Gardner Insurance Agency

7900 Sudley Road, Manassas, VA 20109
(703) 257-2820

Auto

How to Choose an Auto Insurance Deductible

Here, we explain the deductible variables so you can select what's best for your needs.

One of the largest factors in choosing auto insurance is choosing a deductible. Deductibles typically range from $500 to $2500, and which amount is best depends on what you and your family can afford.

Deciding on Auto Insurance Deductibles

What is a deductible?

A deductible is how much you pay out-of-pocket before your insurance kicks in. For example, if your auto policy has a $500 deductible, but your claim has $1500 in damage, you will pay $250, and your insurance company will pay the remaining $1000 in damage.

Why shouldn’t I choose the cheapest deductible?

The amount of your deductible directly affects the amount of your premium. The general rule of thumb is the higher your deductible, the lower your premium. For example,

A high deductible plan might have a $100 a month premium and a $2,500 deductible. You’re saving money every month by paying a lower premium, but your emergency fund might take a hit if you get in an accident and must pay $2,500 out-of-pocket.

A low deductible plan might have a $250 a month premium and a $100 deductible. Your monthly bills will be higher, but you’re only expected to pay $100 out of pocket if you get in an accident.

Many people try to find the sweet spot between a monthly premium that fits their budget and a deductible that they can afford. Your local insurance agent can help you crunch the numbers and determine a premium and deductible that best fits your financial situation.

How do I determine my deductible?

First, determine how much you can afford to pay out-of-pocket. The first place to start is by checking your emergency fund and determining how much you would be comfortable withdrawing in the case of an auto accident. You also need to look at your monthly budget to determine how much you can afford to pay for your monthly premiums. The goal is to find a compromise between a premium that fits your monthly budget and a deductible that you can afford to pay without depleting your emergency savings.

The next thing to consider is your risk. Do you have a history of automobile accidents? Do you drive in busy intersections or high traffic areas? Do you frequently drive on roads that contain deer and other animal crossings? If you feel that you are likely to have an auto insurance claim, it may make sense to go with a lower deductible, so you can pay less if an accident occurs.

The final thing to consider is the value of your vehicle. If your car is only worth $2,200, it probably won’t make sense to choose a $2,000 deductible. On the opposite end, high-value vehicles tend to have higher premiums, so it may make sense to choose a higher deductible to reduce the amount of insurance costs you’ll have to pay each month.

Overall, the amount of your deductible is highly dependent on your financial situation. Your local insurance agent can work with you to help determine what deductible you can afford. They can also check your eligibility for discounts, helping you save money in the long run. Rockingham Insurance is here to help you with your auto insurance needs. Contact a local agent today to determine which auto insurance coverage is best for you.

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