How much auto insurance you carry is important. But one of your biggest concerns is likely the cost of coverage. You want to carry enough insurance. But, you also want to be able to afford rates and deductibles.
Paying for auto insurance impacts your checkbook. Nonetheless, your payments are necessary to keep coverage. It is important to consider the financial aspects of affording car insurance coverage. Two big expenses are your deductibles and your premium payments.
Premiums and deductibles can be considerable. Think about the various affordability options when selecting premiums and deductibles.
What is a premium?
Your premium is essentially the cost of your auto insurance plan. You pay your premium to the insurance company to maintain your coverage. The premium payments last over the life of your plan.
Insurers base car insurance premiums on a variety of factors. These include things like state laws, the cost and age of your car, and your driving record.
How do you pay your premium?
Your premiums cost a certain amount of money every year. It is your responsibility to meet the total cost of your premium. You often have options to pay your premiums. Some people pay one lump sum for the premium. Others pay semi-annually, monthly or on some other schedule.
By paying one lump sum for a premium, you save yourself the risk of missing a monthly payment. If you miss a payment you could lose your coverage. You may even qualify for a small discount from your auto insurance company if you pay in-full up front.
However, paying your entire premium in one lump sum can be expensive. You need to make sure you have the financial assets to pay all at once. If you don’t, paying in installments may be better for you. But, you must never forget to make a payment.
What is a deductible?
Your deductible is part of the coverage on your car insurance policy. If you have an accident, you meet the cost of the deductible before your auto insurance company pays a claim.
Let’s say your deductible is $1,000. If you have $200 in damages, you must pay for all repairs since the damage costs are below your deductible.
If you have $5,000 in damages, you must pay for at least $1,000 of the repairs. That is your deductible. Your insurance will then pay either the full remaining $4,000 or it will give you a claim for a lesser amount. You will have pay the difference on top of the $1,000 deductible.
Choosing a deductible can be tricky. Often, a higher deductible means a lower car insurance rate. But, a higher deductible means you may face higher out-of-pocket costs for damages. Look at your finances and decide how much you can afford outright before buying a deductible.
At The Beckman Company, we can help you get the right deductible and the correct payment schedule. If you have questions about auto insurance in Oklahoma, call us today at (800) 699-5905.