However, this may not be a great decision for all drivers. We’ll explore the pros and cons of raising your car insurance deductible so that you make an informed decision for your personal finances.
Pro: Lower Monthly Premium
One of the biggest advantages of raising your car insurance deductible is the immediate drop in your monthly premium. When you agree to pay more out-of-pocket after an accident, your insurance company offsets the potential expenses with lower monthly payments. This can free up some extra cash in your budget.
Pro: Potential Savings Over Time
By consistently paying lower premiums, you could save money over time. If you are a safe driver who files very few claims in a year, you will likely never need to spend much out of pocket for medical bills and property damage due to car accidents. Over several years, these savings can be substantial enough to cover other expenses or investments.
Pro: Discourages Small Claims
Raising your deductible can also discourage you from filing small claims. You might be able to pay out-of-pocket for minor repairs or damages that fall just above your deductible, avoiding the need to file a claim. This can be beneficial because filing too many claims can hike up your premiums.
Con: Higher Out of Pocket Costs
While lower monthly premiums are enticing, the flip side is higher out-of-pocket costs when an accident occurs. If you raise your deductible, you must be prepared to pay more upfront before your insurance kicks in. Weigh whether the savings on premiums will offset the potential financial burden during a claim.
Con: Slower Claim Processing
Another downside to high deductibles is a slow claims process. Because you’ll be paying more out-of-pocket, you might take longer to gather the necessary funds to cover your deductible. This delay can extend the time it takes for your insurance company to process your claim fully and be a significant inconvenience.
Con: Potentially Delayed Repairs
Delaying the claim process could also mean delays in car repairs. The longer it takes to pay the deductible, the longer you’ll be without a fully functional vehicle. If you depend on your car for daily commutes or other essential activities, this can be a major disruption to your life.
Raising your car insurance deductible offers some great benefits, but it’s not a decision to take lightly. While the potential to save money on insurance is compelling, the higher out-of-pocket costs and possible delays in repairs and claims processing are important considerations.
Before making any changes to your policy, assess your financial situation and consult your insurance provider to balance your needs. Evaluate all these pros and cons to make the best choice for your financial well-being.
Image Credentials: By Andrey Popov, File #: 486739956
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