Why does raising comprehensive coverage lower my premium.?

Question

I called my insurance company to talk about getting a new car and was looking for a quote on my insurance premium increase.

I currently have 500 for comprehensive, if i left it at that with the new car my monthly payment would be around 225.

If i raise my comprehensive to a 1,000 she said it would lower my monthly payment to 180.

Why?, And also if I'm just switching my policy to a new car, I don't have to pay another down Payment do I? Or do I just start paying the increased amount the next Month.

Any help with as much info. as possible would be great.

Thank you.

Answer 1

What you are raising is your deductible.  The higher deductible you are willing to carry, the lower the premium will be.

Answer 2

Raising the coverage does NOT lower your premium.  Raising the DEDUCTIBLE - the amount out of your pocket, before the insurance kicks in, does lower your premium - because raising the deductible, actually lowers how much the insurance company has to pay.  When they pay less, you pay less.

No, you don't put another down payment, if you're only changing cars - you just have a change in your monthly payment.

Answer 3

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Answer 4

The number that you are talking about is the deductible.

$500 means if you had vehicle damage (hit a deer for example) and it caused $2000 in repair costs.

You would pay $500 and the insurance would pay the remaining $1500.

if you raise your deductible to $1000 than in the same scenario you would pay $1000 and the insurance $1000.

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You should only raise your deductible to as much as you realistically could afford in the event of an unexpected event.

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As for the new car, you will just begin to pay the new increased amount on your next monthly statement as you correctly assumed.