Auto Insurance Deductibles ǀ What You Need to Know

Auto Insurance Deductibles ǀ What You Need to Know

Before you decide which auto insurance policy is the one for you, you should know how deductibles work. When you file an insurance claim, you may have to pay a predetermined amount before your claim will be processed. This is payment is known as a deductible.

This article is going to explain everything you need to know about deductibles. It’s important to know the facts as they may affect your insurance premiums. You don’t want any nasty surprises when you claim, so it’s best to know what your obligations are.

Deductible vs Premiums

To clear up any confusion that people may have with regards to insurance premiums and deductibles, let’s start by differentiating between the two types of payments.

Your insurance premium is the amount you pay every month (or year) to insure your car. Paying your insurance premium allows you to claim when you are involved in an accident, your car is stolen or damaged.

A deductible is payable for certain types of insurance claims. While not every insurance claim is subject to a deductible, it is payable for each applicable claim. If you’re unfortunate to have to claim twice in the same year, you will have to pay the deductible for each claim.

When do you have to pay a deductible?

Generally, you will have to pay a deductible when you claim for any accident or collision where you are at fault. The deductible has to be paid before the insurance company will pay for repairs to your vehicle or the other person’s car.

In most cases, you don’t have to pay a deductible for liability or medical claims. Deductibles typically apply to collision and comprehensive insurance claims. Some insurance companies may have certain types of claims that are exempt from a deductible, like a windshield replacement.

When buying an insurance policy, you should be sure to find out how much your deductible is and when you are required to pay this amount.

Don’t be afraid to ask pertinent questions like, when do you not have to pay a deductible and what you can do to reduce the amount you will have to pay.

Typically, the driver who is at fault is responsible for paying the deductible. If you’re involved in an accident and the other driver is at fault, but is not insured, you may have to pay the deductible.

How much is an auto insurance deductible?

Deductibles vary depending on your individual portfolio, the insurance company, and your insurance premiums. You will have a choice as to whether you want to pay a higher deductible and pay lower premiums or a lower deductible and increase your premium. Auto insurance deductibles can range from $100 to $2,500.

The amount you pay as a deductible may also be dependent on what type of claim you’re making. The important thing is to weigh the pros against the cons of how much you pay in premiums to your deductible.

It’s tempting to go for the lowest premium in the hope that you won’t have to claim. However, paying thousands of dollars when you have to file a claim can be devastating. It may not be worth increasing your deductible to save only a few dollars on premiums.