Most insurance agents advise policy owners to raise their deductible if they want lower premiums. While increasing your deductible is the right move for some people, it’s not for everyone. But what are the benefits of carrying a high deductible on your auto, home, and other insurance? But before we provide you with these benefits.
What Exactly Is A Deductible?
A deductible is an amount you have to pay out of pocket when you file a claim before the insurance covers the remainder. Deductibles usually apply to most coverage types on your auto, home, health, flood, motorcycle, and other insurance types except for liability.
For instance, let’s assume you have a deductible amount of $500 on your auto insurance. You were involved in an auto accident, and the cost of repairing your car is $1500. You will pay the first $500 of your deductible, while your insurer will pay the remaining $1000. However, if the cost of repairing your car were lesser than your deductible amount, your insurers wouldn’t pay any amount because the claim is worth less than your deductible.
Benefits To Carrying A High Deductible
The aim of getting insurance is to make sure you can survive financially if something happens. Carrying a high deductible means lower premiums. You can put these savings together to create a sizeable emergency fund you could use to protect your home, car, assets, and family if you rarely use your insurance.
Remember, the best way to save on your premiums is to shop around and compare quotes from different companies. This could save some money on your insurance bills without affecting your finances with a deductible.