Comprehensive auto insurance coverage (aka “Other than collision coverage) protects you from all damage caused by theft, vandalism, fire or hail. In other words it covers the damage to your vehicle that your collision coverage does NOT cover.
Comprehensive coverage, along with collision coverage both have deductibles you can set. The minimum being $50, maximum $2000 and standard deductible of $500 ($250 for some companies). The standard deductible means that anything below that is going to cost you more and anything more than the standard is going to cost you less in premium payments.
For example, if the deductible for your car is currently set at $500 and you’re paying $161 annually for your comprehensive coverage, then dropping your coverage to $2oo is going to end up costing you $200 annually. If you go even lower and drop your deductible down to only $100 you’ll be paying $219 dollars a year for your comprehensive auto insurance.
Conversely, if you raise you deductible to $1000 per claim, your annual premium will go down to $132, if you raise it up even higher to $2000 it will only cost you $119 per year for your comprehensive auto insurance.
It’s your call whether the trade-off is worth it or not. The math is simple – if with paying $500 extra for the deductible you’re saving yourself $31 dollars a year on your comprehensive coverage, take into account that on average some sort of accident happens once in 5 years, that means that with this example you’ll only be saving around $150 on your comprehensive coverage and when the time comes to file a claim – you’ll be out $350 because of your increased deductible.
Now, it’s definitely worth it financially to raise the deductible on your collision coverage, since you’re paying more for it than for your comprehensive coverage, so the savings are going to be much greater than the difference in the deductibles you’re going to pay. Most of the time you’re going to be getting the best deal when you raise your deductible from $500 to $1000, after that diminishing returns come into play and for each $500 that you put towards your deductible you won’t get as much as you got the first time by increasing your deductible from $500 to $1000. So anything above that is actually worth sitting down with a calculator and figuring out mathematically. (It’s really not that hard when you have the numbers in front of you.)
Another case where you would DEFINITELY want to raise your deductibles as high as possible to avoid very high premium payments is when you have three tickets (and young) and on the verge of being dropped from your insurance policy by your auto insurance company if you get one more ticket. In this situation you know for sure you won’t be turning in any small claims as they might result in you being dropped from the insurance company policy, but actually paying the highest deductibles might save you lots of money.
Also it’s very important you understand when to drop collision and comprehensive coverage, so in case you have three driving tickets in the past three years and your collision and comprehensive premiums are sky-high, think about the car you’re driving and if you really need comprehensive and collision insurance on it. Take the salvage value of your vehicle – the car value/ by collision and comprehensive period will give you the payback period. If the payback period is five years or less, you can drop the collision and comprehensive coverage on your vehicle to save money.