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car insuranceChoosing a high deductible is a way to save money while fulfilling the legal requirement in many states to have car insurance.

Going from a $500 deductible to a $1,000 one will save 5-10 percent on the premium, or about $15 in monthly savings for the average consumer. Moving three or more cars to a $1,000 deductible could add up to a fair amount of car insurance savings.

The savings could be put away to pay the deductible. Saving about $100 over six months of insurance premium payments can allow some people to pay their bills.

A higher deductible won’t only lead to lower insurance premiums, but to fewer claims filed to keep them low.

There are some things to consider before making such a decision. Here are some of them:

Have $1,000 stashed away?

It would be wise to have the higher deductible amount in a liquidity fund such as a savings account to cover you if you have an accident and have to pay a deductible — which is a specified amount of money an insured person must pay before an insurance company will pay a claim.

Deductible amounts are typically in increments set by each state’s insurance department, often set at $100, $250, $500, and $1,000. The higher the deductible, the lower the insurance premium because the insured is taking on more of the risk. ...continue reading