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Here’s Exactly How to Choose the Best Auto Insurance Deductible

Choosing your auto insurance deductible just might be the most important – and confusing – decision you’ll make this year. ​ 

If auto insurance is a new concept to you or you’ve recently got a new car, you want to ensure you’re making an educated choice about the coverage you need that includes nothing you don’t. 

When you choose a deductible, you’ll need to consider many variables like your financial position, vehicle value, and even road conditions – no two drivers are alike.

This is a very personal decision that depends on many unique factors, but Higgins Insurance is here to help you every step of the way. Don’t hesitate to reach out to our friendly team with any questions. 

How Does Your Auto Insurance Deductible Work?

As a driver in the Maritimes, you never know what may happen out there on the open road. We’re no stranger to harsh winter snowstorms and we have to share the road with plenty of wildlife like deer or even moose.

In the unfortunate event that you need to use your insurance, you want to make sure you’re covered at a price you can afford. This is especially true as we enter the winter months and insurance claims start to rise.

The concept of an auto insurance deductible is fairly simple: you make a claim for a certain amount of damage, you pay the deductible, and your insurance company covers the rest. Your deductible can range anywhere from $100 to $2,000 depending on your specific insurance plan.

It might seem that you’ll always want to go with the lower deductible, so you pay less when you have to file a claim. However, that sweet low deductible comes at a cost: higher monthly payments.

To complicate matters a little further, there are two different types of deductibles that apply when you file your claim: comprehensive and collision.

  • Collision Deductible: You got into an accident. Whether or not you were at-fault dictates whether you pay the collision deductible on your policy.
  • Comprehensive Deductible: This applies to damage caused by fire, theft, vandalism, impact with an animal, or any glass breakage, you would be subject to your Comprehensive deductible on your policy, depending on your particular policy.

Let’s say you have a $500 deductible and you got into an accident during a snowstorm that resulted in $2,000 worth of damage. More bad news: the accident was also your fault. After filing a claim, you’ll pay $500 and your insurance company will pay the remaining $1,500.

As you can see, it’s not as easy as just picking the lowest deductible for cheaper repairs or the highest deductible for low monthly payments. Instead, you’ll need to speak with one of our friendly agents to find the best deductible to suit your needs.

Auto Insurance Deductible: $500 or $1,000? Here’s How to Choose

At first glance, you’re probably thinking, “of course I want the lowest deductible so I can pay the least amount for any damage after an accident.

Not so fast. Every person (and every vehicle) is unique. In many cases, you absolutely don’t want a very low deductible – it completely depends on your personal situation. That’s why our friendly team at Higgins Insurance is here to help you figure out the best coverage for your personal needs.

Here are a few questions you should ask yourself as a driver when deciding which auto insurance deductible is right for you.

How Much Money Do I Have Saved for Emergencies?

This is the first thing many drivers consider when choosing a deductible because it can make or break you after an accident.

Higgins Insurance understands how important your vehicle is to you: you need it to get to work and care for your family. An undrivable car can quickly derail your life in more ways than one.

Do you have enough saved to cover your deductible in the event of an accident? In general, you’ll want to choose a deductible you can manage to pay out of pocket without too much trouble.

How Much is My Vehicle Worth?

The second factor you should consider after out of pocket expenses is the value of your car. This is because your vehicle’s value drastically affects the cost of your insurance in general.

If you have a brand-new car or a flashy sports car, for instance, your insurance will likely already cost more than average. In this case, you might want to deal with the larger deductible to keep your monthly insurance costs a little lower.

On the other end of the spectrum, it might not make much sense to have a very high deductible on an inexpensive or old vehicle. If your deductible is $1,000 and you’re filing a claim for $3,000 worth of damage, it might seem futile to repair the car at all.

As a general rule, your deductible should fluctuate with your car’s overall value. There’s not much point in having a $500 deductible on a car that’s only worth $3,000.

What’s My Risk for Actually Filing a Claim?

This is a tricky one because you simply can’t predict the future. You can, however, take a few factors into consideration:

  • What time of day do you drive? Do you frequently zip around in rush hour traffic?
  • Do you find yourself narrowly missing deer or other animals on a regular basis?
  • Do you spend a lot of time on the road in general?
  • Have you had many accidents in the past?

If your chances of getting into an accident are fairly high, it might be worth the higher monthly payments to enjoy a lower auto insurance deductible when you actually need to use your insurance.
If you’re generally a safe driver and don’t spend much time in rush hour traffic, you can probably get away with a higher deductible – just don’t forget to take the first point on this list into consideration, too.

Statistically speaking, the more time you spend on the road (especially during peak hours), the more likely your chances of getting into a fender bender at some point. Remember to always keep your eyes on the road and away from any electronic devices.

At the same time, if you have a less-than-perfect driving record, your monthly insurance payments will already be a little higher so you might not be able to afford a lower deductible. It all depends on your personal situation, driving history, and vehicle. Higgins Insurance can help answer any questions you have.

How Would the Costs Balance Out?

Get ready to do some math (if you give us a call, our friendly team at Higgins Insurance can help with this). You’ll need to figure out if the monthly costs of a lower deductible will result in tangible savings in the long run.

First, you’ll need to get a quote from an insurance agent for the rate of each deductible. Take those monthly payments and see how much you’ll pay over the next three years. Next, factor in your accident risk and whether or not you’ll actually be able to pay the auto insurance deductible in a pinch.
Does it seem like you’ll be losing money in the long-run with a low deductible? Or does it make sense to weather the higher monthly payments because your risk is a little higher and you don’t have that extra $1,000 sitting around in an emergency fund?

Which costs add up into real savings and benefits for you?

Can I Choose Multiple Deductibles for Different Scenarios?

Yes, you can customize your insurance for maximum savings. Many people choose a low auto insurance deductible for their comprehensive coverage since this type of coverage typically costs less to begin with.

Since collision insurance can quickly become pricy with full coverage, you might want to go with the higher deductible option. Don’t forget to compare monthly payments for each deductible before making your final decision.

Higgins Insurance understands that you don’t want to pay a penny more than you have to for auto insurance. Our dedicated team can work with you to find the best insurance for your personal situation.

Higgins Insurance is Here to Help

Higgins Insurance is one of the fastest growing independent insurance brokers in the Maritimes Provinces with over 20 years of experience. We understand how confusing it can be to choose an auto insurance deductible when you can’t tell the future and that’s why we’re here to help.

Our streamlined app allows you to review your policy, browse coverage options, and even file claims from the palm of your hand. This is part of our quest to make your life easier.

Find out why so many professional groups trust Higgins Insurance with their auto, home, and life insurance needs. We believe in treating our clients like family with the best services possible and we won’t let you down when you need us most.

Contact Higgins Insurance today to request a quote or ask about group discounts.

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