Read this tip to make your life smarter, better, faster and wiser. LifeTips is the place to go when you need to know about Auto Insurance and other Financial Planning topics.
When you compare auto insurance rates online, you'll be asked to choose deductibles for your policy. A deductible is the amount of money you must pay out of pocket before your insurance benefits kick in. While you're experimenting with deductibles and coverages, you'll notice that your rates decrease as your deductibles increase. This is because you're reducing the amount of risk the insurer must take on by committing yourself to paying it. It may be tempting to choose very high deductibles in the interest of keeping your premiums low, but remember that if you have an accident, you must be able to pay the deductible amount.
If you're unable to pay your deductible, you may not be able to afford your car repair bills and get back on the road after an accident. Keep your deductibles as high as you can comfortably afford when you compare auto insurance rates and don't create a landmine waiting to explode in the form of too-high deductibles.