If your car is stolen, you pay your deductible before your auto insurance pays you the loss. If your car is worth $2,500 and you have a $500 deductible, the most you can collect is $2,000. On the other hand, the higher your deductible, the lower your monthly premiums. It's up to you whether lower premiums or a lower deductible makes better sense for your finances.
Comprehensive coverage is car insurance that pays for damage or loss caused by theft, vandalism or a break-in -- anything except damage from a collision. It covers damage up to the value of your car. If age has depreciated your car's $14,000 purchase price to $9,000, $9,000 is all the policy will pay if the car is stolen. If you have a deductible, it will pay $9,000 less the amount of the deductible.
If your car is more than five years old, check out its value in a used car guide. It's possible the value has depreciated to the point your comprehensive coverage would hardly pay anything. Many drivers drop their coverage if they decide it's not worth the added premiums. The drawback is that if your car is stolen and you don't have comprehensive coverage, you won't receive anything at all.
If you decide comprehensive insurance is worth carrying, decide how large a deductible you can afford. Bigger deductibles will save you money on your premiums, but if your car is stolen, it's money you'll have to pay out of your own pocket. Writing on the Bankrate website, Clark Palmer recommends you set aside money solely to cover your higher deductible; once you save up enough money, raise your deductible and see your premiums drop.
Go over your policy and make sure you're clear about what coverage you have. If you incorrectly assume you have comprehensive coverage, you'll be in for a shock if you car is stolen. Consider whether you'd like your policy to include rental coverage for when your car is stolen or otherwise disabled, or roadside assistance. Know the details of what you're buying: Some companies impose a waiting period before you can take out a rental, for instance.
- Edmunds: Avoiding Auto Theft and Insurance Problems
- Nolo: Buying Car Insurance
- Bankrate: Cheap Car Insurance, the Smart Way; Clark Palmer; Feb. 2011
- Insurance Information Institute. "Understanding Your Insurance Deductibles." Accessed Aug. 2, 2020.
- Progressive. "What Is an Insurance Rider?" Accessed Aug. 2, 2020.
- HealthCare.Gov. "Out-Of-Pocket Maximum/Limit." Accessed Aug. 2, 2020.
- Travelers. "Home Insurance Deductibles and Limits." Accessed Aug. 2, 2020.
- Allstate. "What Is Zero-Deductible Car Insurance?" Accessed Aug. 2, 2020.
- Hanover Insurance Group. "Understanding Waiver of Deductible Coverage." Accessed Aug. 2, 2020.
- HealthCare.Gov. "Deductible." Accessed Aug. 2, 2020.
- HealthCare.gov. "Deductible." Accessed Aug. 2, 2020.
A Durham, NC resident, Fraser has written about law, starting a business, balancing your budget and fighting evictions, among other legal and financial topics.