Online Auto Insurance Discusses Pros and Cons of Assuming Extra Risk

    RANCHO CUCAMONGA, CA, June 01, 2011 /24-7PressRelease/ -- In addition to the usual admonitions given to consumers looking to keep their auto insurance payments slim -- like making sure to keep a clean driving record and to comparison-shop -- many authorities on cost-cutting say to consider lowering coverage or raising deductibles. By doing this, the policyholder is assuming more risk. In a new FAQ from OnlineAutoInsurance.com, the writers discuss the merits and drawbacks of using this method.

A comprehensive or collision deductible is a set dollar limit up to which the consumer will have to pay if he or she files a claim under those coverages; the insurer only covers damages above that dollar limit. So if the deductible is $500 and the damage total is $1,000, the policyholder pays the first $500 and the insurer pays the remaining $500.

In order to have better chances of getting cheap auto insurance, the policyholder can opt for a higher deductible. According to the Insurance Information Institute (III), going from a $200 to $500 deductible could cut comprehensive and collision costs by 15 to 30 percent. "Going to a $1,000 deductible can save you 40 percent or more," the III says.

Source: http://www.pueblo.gsa.gov/cic_text/cars/autoinsu/autoinsu.htm

Before doing this, though, policyholders should consider the long term implications. Although immediate costs are being cut, the individual is taking on a higher risk of having to pay for damages after an accident in exchange for those cuts. So depending on the cost of coverage, the 40 percent reduction could end up being smaller than the $1,000 that would need to be paid in the event of an average claim.

In 2009, the average comprehensive claim was over $1,000 and the average collision claim was nearly $3,000.

To learn more about this and other ways to save on car insurance, readers can go to http://www.onlineautoinsurance.com/cheap/ where visitors will have access to informative resource pages as well as a quote-comparison generator that can help speed up the comparison-shopping process.

To access the full FAQ, visitors should follow the "Questions" link located at the top of any page on the site.

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