Car insurance quotes discounted by deductible
If you ask anyone to identify the quickest and easiest way to get a discount when insuring your vehicle, the standard answer is, "Agree to a higher deductible." It's common knowledge, which raises the more interesting question, "Why do most people think increasing the deductible is a good thing?" Well, you all just suffered jaw-drop. "Huh? Why shouldn't we just keep increasing our deductible if it saves us money?" Well, it all comes down to what insurance is for. Let's go back to basics. People form groups and share out the cost of the risks between them. Although everyone pays (sorry for a little socialism here), the cost per head is less than the cost if you, as an individual, suffer the loss. The alternative is self-insurance. That means you save up a bank account full of cash just in case you cause a traffic accident. That way, you will be able to pay to repair the other vehicle(s) you damaged, all the medical costs of those injured, loss of earnings while they healed, and repair or replace your own vehicle. Except all but three states have made holding an auto insurance policy mandatory. Lawmakers do not believe you will all save up against this risk and so insist you all carry a minimum amount of liability coverage.So what does this have to do with deductibles? When insurance started as a business, it was "for profit" but, in those days, the level of profit was quite modest. In fact, insurers can make a loss if there are too many unexpected claims. But, starting in the 1980's, the industry decided they wanted to make the most money possible. This meant moving the deductible to the front. If you agree to a deductible, you are self-insuring up to that amount. In practical terms, you have a contract of insurance, but agree not to claim if the amount is less than the deductible. If you have no bigger losses, that allows the insurer to take all your premiums as gross profit. Better still, because you do not make as many claims, it reduces its administration costs and makes the insurer even more profitable.
Does this mean you should not agree to a deductible? Start by asking yourself, "How often do I have an accident?" If you have driven safely for years and never had an accident, you could assume this will continue and take the maximum. So long as your luck holds out, you will take the discount and be a winner. But if your record is not good (or you are unlucky), can you afford to pay out the deductibles in cash when you have one or more accidents? Remember, the deductible is payable for every claim not once a year. Put numbers into the question: you agree a deductible of $1,000 but have two accidents in the same year. Do you have $2,000 immediately available as cash or credit? Well, it's back to you now. Go through the questionnaire several times with different amounts of deductible. That gives you car insurance quotes with different levels of discount. Now take a decision based on your driving record and savings. If there's still doubt, get car insurance quotes from different sites or from the insurers directly. Explore your options and find out exactly how much you might save and whether it's safe to increase the deductible.
