The first question is: what is a deductible? A deductible is the amount of money you have to pay before your insurance comes in and takes care of it.
Let me give an example. You just got into an accident and you make a claim. You have a $1000 deductible and the accident is going to cost $6000. For that accident, you have to pay $1000 out of pocket and the insurance will pay the remaining $5000 that is owed.
However, there are pros and cons of high deductibles and low deductibles.
With a high deductible, your insurance premium is lower. The higher the deductible, the lower the premium. This is great for paying bills because less is owed to the insurance company each month. However, if you get into an accident or make a claim, you have to pay more. Claims such as busted windshields cost less to fix than your $500 deductible so you would have to pay that entire amount owed.
With a low deductible, you would not pay as much for each claim or accident. Meaning that if you got in that $6000 crash with a $100 deductible, all you would need to pay is $100 and the other $5900 would be taken care of. However, your insurance premium would be much higher to get those low deductibles.
It’s a tough decision. To pay more a month or to not pay more a month?
That is the question.
Happy Friday! Have a great weekend!