Drivers will go to great lengths to find the cheapest car insurance rates, and one of the first things that they'll do is to change the coverage limits and deductibles of their insurance policies in order to limit their monthly premiums. A car insurance policy's deductibles will have a very significant effect on the car insurance rates of the policy, so this is a logical place to start looking when limiting costs. There are some legitimate cases in which premiums should be changed, but it's also very important to understand the risks of taking this type of action and how you'll be lowering the value of your auto insurance policy.
Some drivers are unaware of exactly how a car insurance deductible works. When you file a claim on your car insurance policy, you'll be required to pay the amount of your deductible. Your car insurance company will pay for the rest up to your coverage limits. For instance, if you have a $500 collision deductible and damages to your vehicle cost you $1,000 to repair, your insurance company will pay for $500 and you'll pay for $500. A high deductible lowers the costs of your car insurance policy because it limits the insurance company's risks. It also lowers the value of the policy, because the driver will have to pay for the costs of all accidents in which the cost of repair to the vehicle are less than $500.
A deductible can certainly be set too low, and this will lead to relatively high car insurance rates. To set your deductibles appropriately, think about what you could feasibly afford for each area of your coverage. You might decide on high collision and comprehensive coverage deductibles if you're ready to pay for costs to your own vehicle after an accident or if you own a fairly inexpensive vehicle. You might decide on high liability limits and a low deductible to limit your costs in an accident that causes injury to another driver. Set your deductibles in a way that makes sense and make sure that you aren't setting yourself up for a dire financial situation after a major accident.
There are usually no legal limits on the size of your deductibles, so drivers should use their best judgment when setting them. Don't go for the cheapest car insurance policy. Instead, try to form a protective policy with reasonable deductibles and coverage limits and use car insurance quotes to keep your car insurance rates low. A high value policy is more important than cheap car insurance rates, but you can get both by understanding your auto insurance.