Car insurance deductibles can be the source of a lot of confusion, although in reality they are quite simple. When deciding on your auto insurance policy, the cost will be affected by your deductible, so it is good to know what exactly you are paying for.
A car insurance deductible is the amount of money you have to pay towards repairs, should your car encounter any damage, before your insurance covers the rest.
Your deductible is determined by the amount of coverage you add to your policy, and you could have more than one. However not all coverage plans have deductibles.
How do deductibles work?
The deductible that you decide on will impact both your insurance rate and how much certain claims will impact you financially. For the most part, people who want to save money on their premiums tend to raise their deductible. In the case of an accident, you will be liable to pay out of pocket more than your insurance company because you take on a larger portion of the financial responsibility.
However, it is vital that you pick an insurance deductible you can afford. If you do find yourself in a sticky situation with repair bills you can’t pay, you’re in big trouble.
What deductible options are there?
If you decide to carry comprehensive coverage, collision coverage, or both, then there will be an individual deductible for each of these. Some insurers may also give the option to choose a deductible on personal injury protection coverage and on uninsured motorist coverage.
Do you pay a deductible if you’re not at fault?
More often than not this depends how easily the ‘at fault’ driver is recognised in a two car incident.
If the decision process takes while, you may have to pay out of pocket to get your vehicle fixed, and be reimbursed at a later date should you be deemed the innocent party. However, if it is a solo accident, then you will have to pay your own deductible.
Similarly, if your vehicle is stolen and not found, you will have to pay your deductible in order to receive a cash settlement totalling the amount of your car. If your car is found, but is damaged, your comprehensive coverage can cover the cost of repairs for the price of your deductible, despite the fact you did not cause the damage.
Overall, the deductible you decide on can help you find a cheap car insurance premium, but it is vital that you take into account what works best for your lifestyle and needs.