Should I Raise My Insurance Deductible?

Should I raise my insurance deductible or shouldn’t I? It’s a question you may be asking yourself in the future so let’s start with the basics first. What we call a “deductible” is the amount you have to pay toward a repair. Bascially the
higher the deductible you choose, the less risk of a payout for the
insurance company — and the smaller the premiums you pay.

So for example, a New Jersey driver would save about $176 to $284 a year going
from a $250 deductible to $2,500. Now if you have an extra $2,500 hiding under your mattress, that’s a pretty good return for your risk.

But if you don’t, well then the loss of your car as you try to find the needed cash could be difficult.

Who Should Raise Their Deductible?

Well it turns out that most people spend much less on comprehensive and collision coverage, which is the insurance that repairs your own car, than on liability which is the
insurance that covers the people you hit. So increasing your deductibles only a
little – like going from $500 to $1,000 might not return much savings.

Typically people who are good drivers are better off raising their deductible
and putting the savings aside every month in case they do have an accident.

In our local agency, usually people with high deductibles of $1,000 or more often own their car, and have a lot of extra money in the bank so they don’t mind paying for
minor damages or living with unrepaired dents on their bumper.

Who Should Not Raise Their Deductible?

It’s a fact that raising
deductibles is one of the best ways to save on your New Jersey car insurance, as long as you are saving the difference just in case an accident were to occur.

But drivers
who take a chance on a deductible they can’t afford may face the possibility of
not getting their car back from the body shop until they pay it.

Usually, insurers will pay the body shop directly for repairs,
leaving the driver to pay the deductible to the body shop. Keep in mind the additional fees that shops may charge you as well!

So basically, if you are not confident about your driving skills, we wouldn’t suggest raising your deductible.