Raising your deductible can cut your premiums significantly.
After you've shopped around for the best rate, raising your deductible can cut your costs even further. It's an easy way to lower your rate without taking on much extra risk yourself. Raising your deductible from $250 to $1,000, for example, can cut your premium by 15 percent or more and make you less likely to file small claims that could show up on your CLUE report and eventually lead to a rate increase. Then you can use the cost savings to boost your liability coverage, which can make tens of thousands of dollars worth of difference in your protection amount.
That 45-year-old Chicago couple could lower their rate by $284 per year just by raising their deductibles from $250 to $1,000. Because the price is so much higher for families with young drivers, raising your deductibles can cut your rates even more if you're insuring teenage drivers. Boosting their deductibles to $1,000 would cut their rate by nearly $690 with their 16-year-old son on their policy. If you don't have any accidents that year, you'd pocket the entire savings yourself, and even if you do have an accident, the premium savings would still offset the extra cost. Be sure to keep enough money in your emergency fund to cover the potential out-of-pocket costs.
If you have an old car worth less than a few thousand dollars, consider dropping collision and comprehensive coverage (also called "physical damage coverage") entirely. You may be paying more in premiums than you could possibly get back from the insurance company in claims. The maximum your insurer will pay to replace your car is the depreciated value of your car minus the deductible. If your car is worth less than a few thousand dollars, your physical damage premiums may be almost as much as the amount you'd get from your insurer if you totaled your car. Each insurer has its own calculations for valuing cars.
Dropping physical damage coverage, however, may not be an option if you have a car loan, and your lender may also limit the size of your deductible.