High deductible auto insurance is one of the prime examples of these catches, and many people avoid it because, they say, they are buying auto insurance to cover them. Why do they have insurance at all if they have to cover themselves?

Let me rewind. The deductible, first of all, is what you pay towards injuries and repairs and the like whenever you make a claim before your car insurance coverage kicks in. So, if I were to get into an accident and the damages to my car amounted to three thousand dollars, and I had a thousand dollar deductible (which I do), then I would pay that amount and the car insurance company would pay the other two thousand in repairs. The amount of the deductible never changes, even if the damages are only about five hundred dollars or fifty thousand. Deductibles are only paid when you are found to be at fault for the accident.

Raising your deductible from the bottom $250 can lower your auto insurance rate significantly, because it allows the car insurance company to pay less. Instead of avoiding this, raise it and start saving money for whenever you do get into an accident and have to pay a deductible. Most people only file a car insurance claim once every five years, so it’s likely that you won’t need your deductible much and you’ll probably save up way more than that amount by the time you have to pay it out if you just save the difference between your auto insurance rate with a low deductible and your auto insurance rate with a high deductible.

You can save a lot of money this way, and not just on your auto insurance rate. A couple of years ago, when I first raised my deductible, I started putting the money I was saving on my  auto insurance rate into a high interest savings account, and now let’s just say that it’s a lot bigger. So why wait? If you’re a safe driver and the likelihood of you getting into an at fault accident any time soon is pretty low, start saving money as soon as possible.