car insurance rate

Insurance is one of the most necessary evils known to man. Insurance companies profit by making the odds and setting premiums so that what the take in is always higher than they pay out. Over the long run, it is likely that you will pay much more to an insurance company than you will ever get back in return.

Insurance companies accept the risk of wrecking your car, or damage to your home, by accumulating it with thousands of other cars and homes. The risk of millions of cars across the country being totaled all at the same time is practically zero. With this in mind, disasters do occur and insurance companies have been known to make large payouts. The fact is, insurance companies take in a lot more money than they ever pay out. There is a reason that insurance payments are called “premiums.”

The deductible, or the amount that you have to pay when damage occurs, is the key to how much you will have to pay each month in premiums. Most damage to cars and homes is rather low. Of course a windstorm may knock off a few hundred dollars in roofing shingles, or a fender bender might cost a thousand dollars to fix. Thus, the question one must ask themselves is, how much should the deductible actually be?

Raising an automotive insurance premium from $500 to $1000 is one of the best investments you can make. Often times, this will drop rates by as much as 25% while only costing you an additional $500 in case of a serious accident. Even with a premium of $1000, damage of $5000 will only cost you $1000 out of pocket, with the remainder coming from the insurance company.

The more risk you are willing to accept, the less you will pay in the long haul. The difference in payments between a $500 deductible and a $1000 deductible will allow you to save the excess in the event that an accident does not occur.


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