Higher deductible, lower premiums: weigh the pros and cons of car insurance with a $1,000 deductible.
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On average, a car insurance policy with a $1,000 deductible will cost $627 for a standard six-month policy — about $105 per month. Let's breakdown what your deductible covers, what it is, and which insurance company offers the cheapest premiums for it.
If you're looking for a full explanation of auto insurance deductibles, please consult our complete overview of car insurance deductibles.
In order to determine which insurer has the cheapest rates with a $1,000 deductible, we created a composite driver profile and gathered sample rates from some of America's most popular insurance companies.
The average six-month premium for a car insurance policy with a $1,000 deductible is $664, with USAA being the cheapest company. Compared to a $500 deductible, this could save you more than $170 per year. Car insurance deductibles and premiums are inversely related — if you lower your deductible, you raise your premium. This is a good cost-cutting solution if you're looking to lower your monthly premium. Displayed below, you can see how much a $1,000 deductible will set you back on a monthly basis.
If you don't qualify for USAA, consider GEICO, the second cheapest insurance company with a $1,000 deductible.
This data reflects a single user profile. There are many rating factors that go into your car insurance premium that are unique to you. The only way to discover who has the cheapest car insurance for you is to compare rates from multiple companies.
Your deductible is what you pay out-of-pocket in the event of a collision, comprehensive, or UMPD insurance claim. Your premium is the total insurance bill that you pay every month to maintain your policy.
Changing your deductible does affect your premium. Your premium and your deductible are inversely related: by raising one, you lower the other.
Let’s return to the first example of colliding with a guardrail and causing $5,000 of damage to your vehicle. If you were to raise your deductible from $500 to $1,000, the amount of money your insurance company must pay out drops from $4,500 to $4,000. Because you’re taking a greater chunk of financial responsibility for the payout from your insurance company, you are rewarded with a lower premium.
Using the same insurance companies as we previously discussed, let's see how our premiums change when we look at $500 and $1,000 deductibles.
|Car Insurance Company||$500 Deductible||$1,000 Deductible|
As you can see, by raising your deductible from $500 to $1000, you lower your premium by $80 on a 6-month policy (on average). However, there’s another reason why raising your premium is a good moving saving tip, which we will explore next.
Standard car insurance deductible levels are $500 and $1,000. If you’re unsure which one is right for you, ask yourself the below questions:
If you’re leasing or have a loan for your vehicle, you might be required to carry a certain deductible. Typically, they will require a $500 or lower comprehensive and collision deductible. The reason for this is they’re simply trying to protect their asset – your vehicle. If you have a higher deductible, they fear you will not be able to pay it.
If you’re deciding between a $500 deductible versus a $1,000, you should consider if there is anyone on your policy that might be more inclined to file a claim. Again, this could refer to someone who has a leased vehicle. Because you do not own the vehicle you are leasing, you are required to return the vehicle in near-perfect condition. This could also refer to young drivers, such as a teen, who has less driving experience. If you’re worried about your teen damaging your vehicle often, as teens do, a lower deductible might help.
Lots of insurance experts recommend having a higher deductible because it discourages you from filing a claim. Collision claims after often seen by insurance companies as at-fault accidents which can increase your premium by an average of 43% per year. Moreover, most insurance companies will keep that at-fault on your insurance premium (and thus charge you for it) for three years.
|Year After Accident||Average Premium Increase|
|Increase at 6 months||+$343|
|Increase at 12 months||+$688|
|Increase at 3 Years||+2,604|
Filing an at-fault where the damages are greater than $2,000 will raise your premium an average of $611 a year or $1,833 for the full three years. Because of this, most insurance experts recommend only filing an insurance claim if you suffer a catastrophic loss where the value of the premium increase plus your deductible is less than the cost of repairs. For example, if you total your vehicle.
Your insurance company sees these types of claims as at-fault accidents because they see you, the driver, as in control of the vehicle when the accident happened. So, in their eyes, you’re responsible.
For a UMPD claim, which is not at-fault by definition, your insurance company may still raise your rates because they had to take financial responsibility for the claim. If your insurance company is rating you for a UMPD claim as an at-fault accident, you should consider that as a sign to shop for car insurance elsewhere.
We should note that comprehensive claims are not generally considered to be the same as collision or UMPD claims. Because of the nature of comprehensive coverage, insurance companies see them as outside of the control of a driver. While a collision claim will raise your rates, our data shows that comprehensive claims tend to only affect you a couple of percentage points.
If you’re looking for more information on deductibles or other information on car insurance, see our additional articles here.