When carrying insurance, it is always the smart thing to do to make your deductible as high as you feel comfortable with. This reduces your monthly expenditure and frees up a few bucks for paying down debt or saving. On our car insurance, we carry a $500 deductible, meaning we have to pay for the first $500 in damages to the car. I actually prefer a $1000 deductible, but the company I use only has $500 as the maximum amount allowed. (If you live in California, check out Wawanesa Insurance, we love them and the rates are great) For 2 drivers on one car we pay $112 for 9 months and then we have 3 months off…it’s not a bad deal for California. Keeping a high deductible:
Lets me keep more of my paycheck
Frees up money to save/invest/pay off debt
Makes me think twice about reporting little incidents, because if the repair would be less than $500, I would have to pay for it anyway, so why go through the insurance company?
On our renters insurance, we also have a high deductible…$2,000. I figure if we lost everything, I wouldn’t mind shelling out the $2,000 as it allows me to get more coverage for the money I spend monthly. If I had a lower deductible, my rates would be higher for less coverage, which doesn’t make sense. The odds of me needing it are pretty slim, so I would rather keep my monthly payment low.
What about you? Do you keep your deductibles high so your monthly payments are lower? Or do you keep them low so in case of an accident you don’t have to shell out that much money?