The Pros and Cons of High Deductibles in Auto Insurance

April 30, 2024

Choosing the right deductible for your auto insurance policy is a crucial decision. A deductible is the amount you agree to pay out-of-pocket before your insurance coverage kicks in if you file a claim. Opting for a higher deductible can lower your premiums, but it also means you'll pay more if you have to file a claim. Let's explore the pros and cons of choosing high deductibles in auto insurance.

The Pros of High Deductibles

  1. Lower Premiums: The most significant advantage of a high deductible is lower premiums. If you're looking to reduce your monthly or annual insurance costs, increasing your deductible is one way to do it.

  2. Less Temptation to File Small Claims: With a high deductible, you're less likely to file small claims, which can keep your insurance rates from increasing. Over time, numerous small claims can lead to higher premiums.

  3. Potential Savings Over Time: If you're a safe driver and rarely file claims, choosing a high deductible could save you money over time through lower premiums.

The Cons of High Deductibles

  1. Higher Out-of-Pocket Costs: The main downside of a high deductible is that you'll have to pay more out-of-pocket if you file a claim. You'll need to have these funds readily available.

  2. Potential Financial Stress: If an accident occurs and you're not financially prepared to meet your high deductible, it can create stress and financial hardship.

  3. May Delay Necessary Repairs: If you can't afford your deductible, you might postpone necessary repairs, which could lead to further damage or safety issues.

Finding the Right Balance

Choosing the right deductible largely depends on your financial situation and risk tolerance. Here are a few things to consider:

  1. Your Savings: Ensure you have enough savings to comfortably cover your deductible if you need to file a claim.

  2. Your Driving Habits: If you're a safe driver with a low risk of accidents, a higher deductible might make sense.

  3. Your Vehicle: If your car is older and its value has significantly depreciated, a lower deductible might be a better choice.

Get Started Today

The decision to opt for a high deductible should be made after careful consideration of your personal circumstances. It's essential to strike a balance between affordable premiums and a deductible you can manage. At Schroeder Insurance, we're here to help you navigate these decisions and choose the auto insurance policy that best suits your needs. Simply call us at 636-583-2296 or click here to get a quote.