Deductibles are the way in which a risk is shared between you, the policyholder, and your insurer. Generally speaking, the larger the deductible, the less you pay in premiums for an insurance policy. A deductible can be either a specific dollar amount or a percentage of the total amount of insurance on a policy.
The amount is established by the terms of your coverage and can be found on the declarations or front page of standard homeowners and auto insurance policies. State insurance regulations strictly dictate the way deductibles are incorporated into the language of a policy and how deductibles are implemented, and these laws can vary from state to state. Note that with auto insurance or a homeowners policy , the deductible applies each time you file a claim.
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If you obtain a quote from an auto insurance company to insure a single vehicle, you might end up with a higher quote per vehicle than if you inquired about insuring several drivers or vehicles with that company. Insurance companies will offer what amounts to a bulk rate because they want your business.
Ask your insurance agent to see if you qualify. Generally speaking, multiple drivers must live at the same residence and be related by blood or by marriage. Two unrelated people may also be able to obtain a discount; however, they usually must jointly own the vehicle. If one of your drivers is a teen, you can expect to pay more to insure them.
Incidentally, some companies may also provide an auto insurance discount if you maintain other policies with the firm, such as homeowners insurance. In other words, be a safe driver. For those unaware, points are typically assessed to a driver for moving violations, and more points can lead to higher insurance premiums all else being equal. Sometimes insurance companies will provide a discount for those who complete an approved defensive driving course.
Drivers may also be able to reduce the number of points they have on their licenses by taking a defensive driving, accident prevention, or other course. Every state has its own rules about accredited defensive driving courses, and GEICO allows you to check what they are by state on its website.
If your policy is about to renew and the annual premium has gone up markedly, consider shopping around and obtaining quotes from competing companies. Also, every year or two it probably makes sense to obtain quotes from other companies, just in case there is a lower rate out there. To run a check on a particular insurer, consider checking out a site that rates the financial strength of insurance companies. The financial strength of your insurance company is important, but what your contract covers is also important, so make sure you understand it.
When you sign up for insurance, the company will generally start with a questionnaire. Among the questions it asks might be the number of miles you drive the insured automobile per year. If you use your vehicle to commute three hours to work every day, you will generally pay more in insurance premiums than someone who only drives one mile a day. If possible, try to use mass transit to rack up fewer miles, keeping in mind that you will usually have to decrease your mileage significantly before incurring a discount.
Also, check with your provider to see how many miles they have you currently driving, as most can give you an improved insurance quote. Buying a huge SUV may sound exciting, but insuring a 5,pound, top-of-the-line vehicle can be more expensive than insuring a small but safe lower-cost commuter car. Some insurers will offer a discount if you buy a hybrid or an alternative fuel vehicle.
You can feel good about protecting the environment and save money on insurance at the same time. When selecting car insurance, you can typically choose a deductible , which is the amount of money you would have to pay before insurance picks up the tab in the event of an accident, theft, or other types of damage to the vehicle. The catch is that, generally speaking, the lower the deductible, the higher the annual premium. Conversely, the higher the deductible, the lower the premium.
Ask your agent how your premium might be affected if you raised your deductible. It may make the annual premium better by several percentage points and put some money back in your pocket, or the savings may be minimal. If you are reluctant to file smaller claims to avoid the risk of pushing up your premium, raising the deductible may be a particularly sensible move.
After all, it makes sense that a driver who has been in a lot of accidents could cost the insurance company a lot of money. However, folks are sometimes surprised to find that insurance companies may also consider credit ratings when determining insurance premiums. Why is your credit rating considered? Michael Barry, senior vice president and head of media relations of the Insurance Information Institute, puts it this way:. Your credit card company or bank may offer free credit score access.
You can check credit reports for free at AnnualCreditReport. However, when planning a move, the potential change in your car insurance rate is something you will want to factor into your budget. Dropping certain types of coverage can be a slippery slope. After all, nobody can predict if or when an accident will occur.
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