September 16, 2021 5:11 pm

Is Zero-Deductible Insurance Right for Me?

You are a teen driver. Your budget likely is tight. You don’t want to pay too much for your car insurance premium. You also might wonder if you can avoid paying high deductibles on your coverage. However, think twice before you think about carrying low deductibles, or none at all. It might wind up being more of a cost risk in the end. Let’s take a closer look at this coverage point.

Yes, it is possible to find auto insurance with no deductible. However, it might not be wise of you to enroll in this coverage. Rather, see if you can work with your insurer in other ways to reduce costs.

Zero-Deductible Auto Insurance

When you buy car insurance, you’ll probably have to select a deductible. The deductible is your financial responsibility in case of a claim.

So, let’s say you have a wreck, and file a $2,500 collision claim. You have a $500 collision deductible. You will pay the $500 deductible up front, and your insurer will pay the remaining $2,000. Often, policies will have multiple deductibles for different types of coverage.

As a young driver, you might not have the money laying around to pay a $500 deductible. So, you might wonder if you can select lower deductibles, or even avoid them altogether.

Most insurers offer deductible tiers. You therefore do have an opportunity to select the lowest available deductible options. Other auto insurers won’t require you to pay a deductible at all. This is a zero-deductible policy. In those cases, you’ll pay little or nothing for your personal losses. Yet, choosing the lowest deductibles might not be what is best for you.

The Risks of Low Deductibles

Choosing policies with low or zero-dollar deductibles might seem like a good idea. But, it might cost you money nonetheless.

As you lower your deductible, your insurer might raise your premium. That’s because by lowering your personal cost share, you increase your insurer’s. So, they might have to pay out more for a claim. As a result, they might have to charge you more.

However, don’t think this is the case in all zero-deductible scenarios. Some insurers will allow you zero-deductible options for little to no cost increases. For example, they might cover your windshield glass replacements without requiring you to pay deductibles.

So, if you can afford a higher deductible, then consider taking it. You might still be able to choose insurance discounts and other options to help you save in more practical, secure ways. Your insurer will gladly work with you to obtain the lowest possible rates for your risk profile.

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