Oh, Hail No! (Do I Have the Right Car Insurance Deductible?)
This afternoon, an unexpected hail storm blew through town. Seeing as how I was at work and we have uncovered parking, there was little I could do to protect my car (except run through the parking lot in high heels while dodging ice pellets and move my car into the underground parking garage across the street - which I watched others do to my great amusement).
So, I’m standing at the window in my boss’ office, listening to the hail pound against the building and thinking, “How much is my deductible again? How large does hail have to be to damage a car? Approximately what coin-size is the hail accumulating on the window sill? Dime? Nickel? Why are coins the standard measurement of hail anyway? My husband parks in a garage at work right? Because $500 plus $500 is $1,000. Thank God I didn’t raise my deductible to $1,000 - that would be $2,000!”
At that point, a coworker joined us and exclaimed that she was so glad she’d kept her deductible at $250 instead of raising it to $500, because that would have been $1,000 for both her and her husband’s cars.
This got me thinking some more. “Am I making a mistake by not having a $250 deductible? How many times have I had to pay my deductible - let’s see, once when that rock off a trucker’s tire broke my windshield (actually, I think I paid out of pocket for that one), once when my husband hit that car at a red light, once when I smashed my car into a pole during a snowstorm…”
However, after examining my car and finding no dents (hooray!), I’ve come to the conclusion that $500 is the perfect deductible for me.
Think about it: With a $250 deductible, you’re going to claim any little thing that happens to your car, which will drive up the price of your premium. By choosing a $500 deductible, you won’t be tempted to claim small amounts of damage (in fact, I would probably pay up to $800 out-of-pocket before making a claim to avoid the years of higher premiums). After all, car insurance is meant to cover catastrophic financial events, not a little dent in your hood.
So why not raise my deductible to $1,000, you ask? Well, for one, $1,000 is typically all of the money I have in my emergency savings since I’m working on getting out of debt. Two, I inquired about the price and it would only save me about $30 every six months. Perhaps when I’m well-off, I’ll self-insure for amounts less than a couple grand.
So there you have it: My virtually math-free way to determine which deductible is right for you.
(This post was included in the Money Hacks Carnival, hosted at Be Thrifty Like Us)
Photo Credit: Hail in Vancouver by Andriy Mishchenko, used under Creative Commons licensing
3 responses so far
Yikes! You all had an eventful day. Seems like you’re making the right decision on the deductible. My choice is to drive a car so old that I don’t care what kind of dings it gets. However, I know in a year or two, I’ll need a new-to-me car. Your suggestion for deductibles is very sensible.
I agree. I actually ran the numbers for a $1,000/$500/$250 deductible to see how it changed my premium and there was hardly any difference (maybe $40/year between $250 and $1000). I went with the $250 because the difference was so minute in the monthly premium. Our car is also 8 years old so that might make a difference. We don’t make claims on anything under $500, but if I needed to, I could. I like the assurance.
[...] Gets Personal: Oh Hail No! Do I Have The Right Insurance Deductible? I too have a $250 deductible for now. I know I “should” have a $1000 one and save $750 [...]