Can I Raise My Deductible to Save on Car Insurance?
When you look at lists of the best ways to save money on car insurance, “raising the deductible” is always on the list.
Yes, you can raise your deductible to save money on car insurance. In fact, it’s one of the fastest and easiest ways to save a significant amount of money on car insurance. Raising your deductible by a few hundred dollars can lead to massive savings.
Of course, there’s a downside: you might save money raising your deductible from $500 to $1,000. However, if you’re in a collision or a minor accident, then you’ll need to pay $1,000 in order to make a claim.
Yes, You Can Raise Your Deductible to Save Money
A deductible is the amount of money you pay in order to make an insurance claim. It’s the amount of money you pay on a claim before your insurance coverage kicks in.
The majority of drivers pay a $500 deductible. Some drivers pay either a $250 or $1,000 deductible. And some drivers pay a deductible as high as $2,000.
Raising your deductible is one of the easiest ways to save money on car insurance. Virtually any driver can raise their deductible to save money. You don’t need to have good credit to save money by raising your deductible. You don’t need to shop around with 100 different insurance companies. Instead, all you need to do is call your insurance company and tell them to raise your deductible. It’s a guaranteed way to save money – an insurance company will never raise your rates when you raise your deductible.
How Much Money Can You Save?
You can save a significant amount of money by raising your deductible. However, don’t expect to instantly get “cheap” car insurance by raising your deductible: on average, drivers will save about 10% on the annual cost of their policy by raising their deductible from $500 to $1,000.
The amount of money you save depends largely on your demographics and location. Drivers in certain states, for example, can save up to 20% by raising their deductible, while drivers in other states might save just 5%.
According to one study on insurance policies, for example, drivers in Michigan will save approximately 4% by raising their deductible from $500 to $1,000, while drivers in Massachusetts will save an average of 19.2%.
The best states for higher deductible savings, according to a study from InsuranceQuotes.com, include Kansas. Massachusetts, North Dakota, South Dakota, and Wyoming. Drivers in these states have a significant amount to gain by raising their deductible. Drivers in Florida, Louisiana, and Michigan, meanwhile, will enjoy some of the lowest savings by raising their deductible.
Of course, drivers can pay deductibles anywhere from $250 to $2,000, with different savings for different levels of changes. Some of the average savings you can expect by raising your deductible include:
- 5 to 8% savings when increasing your deductible from $250 to $500
- 8 to 10% savings when increasing your deductible from $500 to $1,000
- 13 to 17% when increasing your deductible from $500 to $2,000
Raising your deductible is a guaranteed way to save money on car insurance. You’re never going to pay more for car insurance when you raise your deductible. However, the amount of money you save varies widely. Drivers in Michigan, for example, can save as much as 20% by raising their deductibles from $500 to $2,000, while drivers in Florida might save just 4%.
Talk to your insurance company to see how much you can save by raising your deductible. Remember: nobody plans on making an insurance claim, and even if you save a considerable amount on car insurance today, you might end up spending more in the long run. There’s a reason insurance companies give a discount: they know it disincentives people from making a claim. Any money you save on your annual insurance policy could be wiped out when you need to make a claim and pay a $2,000 deductible.
Call your insurance agent today to determine how much you can save by raising your deductible to $500, $1,000 or $2,000.