How could your car insurance deductible cost you $5,000 out of pocket?

Car insurance is mandatory almost everywhere in the world. This makes sense because without it the financial consequences of an accident could easily destroy the life savings of everyone involved. That’s why we pay premiums to insurance companies every year in exchange for transferring our accident risk to them. On the other hand, governments and regulators track insurers' financial performance closely to ensure they can pay the cost of your accident without going into bankruptcy or becoming insolvent.

Nearly 70% of drivers don’t get into an accident over the course of ten years. This makes many people think that car insurance is just a money grab by companies-–that is, until they need it. Some also go one step further, and knowingly (or unknowingly) increase their deductible amount to save a few bucks on their car insurance. We’ve even seen some insurers, and brokers advertising publicly for people to purchase policies with a higher deductible. But, is it really a smart thing to do?

Let’s hear Devin’s story

At Allegory, we regularly talk to our current and prospective customers to understand their needs, designing our products accordingly. In one of our user interviews, we met Devin, who lives in Michigan, and his story really stood out, which we want to share with you in this blog post.

Devin was shopping for car insurance online two years ago. He wanted to save some money as he thought he was a good driver and had never got into an accident before. When he searched for different options, he saw that increasing the deductible amount could save him $140 per year. He also told us insurance professionals even promoted some of the information he saw on the internet, so he thought it was the smart thing to do – until he got into an accident.

He only then realized that he was responsible for paying $5,000 of the $8,000 damage out of pocket, which put a big dent in his life savings.

What is a good deductible for car insurance?

Our honest opinion is zero-dollar deductible is the best way to go. Because we buy insurance to protect ourselves against unexpected financial losses, however, that’s almost impossible to find it in the market. Though, some insurers offer disappearing deductibles if you’re with them for at least five years.

The second best way is the amount you can pay out of pocket at any time. It’s always ideal for keeping that amount in your savings account so that you’ll not have any financial hardship when you have to pay.

But, there is another option that we recommend you check out.

How does Allegory help you pay for your car insurance deductible?

First of all, you can download the Allegory App for free to better your driving, prevent accidents, and help your friends and family stay safe on the road.

Moreover, you can subscribe to our deductible waiver product with a single click on the app and have pay-as-you-go coverage just for your deductible. Once the claim cost exceeds your available deductible amount, you can easily submit your claims through the Allegory App, and we will instantly make the payment. It’s that simple. For more products, you can check out our Get Covered page for more details.

With Allegory, you can stay safe and get covered all the time.

‍