An insurance deductible is an amount you pay after filing a claim. It is essential to understand exactly how your car insurance deductible works so you understand the process if you have to pay it.
A Deductible is Different than a Premium
The premium is the amount you pay to retain your car insurance. Paying your premium ensures you have car insurance. The deductible is the amount you have to pay if you file a claim. The deductible is your share of the financial responsibility.
Difference Between Health Insurance and Car Insurance Deductibles
A health insurance deductible is different than a car insurance deductible. With a health insurance deductible, once you pay that amount in a calendar year, you don't have to pay towards your deductible again. It is a yearly amount that you have to pay.
That is not how a car insurance deductible works. You have to pay your car insurance deductible each time you file a claim. So if you get into two accidents a year, you will have to pay the deductible twice. The good news is that if you don't file a claim, you don't have to pay your deductible.
Types of Coverage a Deductible Applies
A deductible applies to different types of car insurance coverage. Not all of the coverage will require a deductible. Deductibles are required with collision, comprehensive, uninsured/underinsured motorist coverage. There is a deductible associated with each type of coverage.
Other types of insurance coverage, such as liability coverage or roadside assistance, usually don't require a deductible.
How Deductible Amount Impacts Premium
When you set up your insurance, you get to choose what you pay for each deductible amount associated with a different type of coverage. The amount that you choose for your deductible can impact what you pay for your premium. The amount you pay for your deducible is the money you cover for an incident before your insurance has to pay. Generally, the larger the deductible you choose, the more of a discount you will get on your premium. That is because you are taking on a bigger load of financial responsibility.
A deductible is something you have to pay for certain types of coverage, such as collision and comprehensive coverage before your insurance will pay the rest of the claim. Your deducible can have a significant impact on your premium costs. Think carefully about what you chose for your deducible, as that is the amount you will be financially responsible for should you have to file a claim. You want it to be an amount you can afford, and that will lower your premium.
For more information about auto insurance, contact an agent near you.
Share28 March 2022
I still remember the first time I had to chose an insurance policy; I was 17 years old and had just saved up enough money to afford my very first car. I was so excited to begin driving, but overwhelmed with all of the different auto insurance options. My father helped me chose a full-coverage policy that would cover the cost of my car if it were to become damaged in an accident. When I inevitably caused a small fender-bender as a new driver, my insurance company paid for my car repairs, so it sure was the best policy for me! Now that I am older and have learned a lot about home insurance and other types of insurance, I thought I would make a blog to help others who need insurance advice, like what my dad gave me. I hope I can help you make wise insurance decisions!