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Choosing a Deductible on Your Home or Auto Insurance

woman with question markAs you shop for any type of insurance, one decision you will face relates to your deductible. Do you choose a lower deductible but accept higher premiums, or opt for a high deductible so that you can lower your premium?

A deductible is the amount you must pay toward damages before insurance will kick in and your insurance company pays 9,000 dollars.

Like most other decisions, there are pros and cons to either option. If you choose a high deductible, you can count on lower premium payments. This may be important to you, or an outright necessity, depending upon your budget.

But what if you choose a 1,000-dollar deductible, and paying a large amount of interest over time. This could eat up the money you saved by getting a lower premium in the first place.

On the other hand, a lower deductible will mean higher premium payments. This could be thought of as the best option for people who don’t like taking a risk. If you can’t count on having money to cover damages in an emergency, a lower-deductible plan might work better for you.

The trick, of course, is to balance your premium payment against the amount you can realistically afford to pay each month. Keep in mind that shopping around to compare rates, and let them guide you toward the best home or auto insurance policy for your budget.