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What You Need to Know About Deductibles


This article is very important for you to get tips on affordable insurance rates. Deductibles pertain to the amount of money which an insured car owner should pay when he gets involved in an accident. The payment of said deductibles is important for a person to maintain his premiums at a low rate. While a person can also maintain or decrease his premium rates by keeping an excellent driving record, looking for policies with low premium rates or making sure that he is using a fairly safe vehicle, still, the most effective way of lowering premium rates is by choosing to shoulder a higher deductible.

Some often mistake deductibles as a deduction of the coverage plan which should be paid for by the insurer. However, these deductibles are a part of the agreement between both parties of the policy. The companies first require that policy holders agree to pay for their deductible before they give out the rest of the money included in the coverage plan. Thus, the insurer is not reliable for giving out the amount which has been declared by the insured person as his deductible. The person must use his own money in order to pay for the deductible.

While it seems to be a heavy feat - to pay for an amount of money when you have a car insurance company to rely on, it however helps to pay for deductibles in order that your monthly premium rates will be lower. This means that you have to set a deductible which you can realistically achieve but which should not be low enough to cause you to pay high monthly premium payments.

Two factors which you have to take into consideration before setting your deductibles are your insurance needs and financial capability. If your finances can pay for a fairly high deductible then apply for one. A higher deductible will mean lower payments for monthly premiums because you have lessened your burden by giving an initial payment using your personal money. In contrast, if you pay a lower deductible, you will have to suffer paying higher monthly premiums.

Computations for deductibles can be done easily and by anyone. If an accident happens and you filed for coverage worth $5,000 with a deductible worth $1,000, the insurer will pay for the $4,000 dollar compensation. But in order to claim the $4,000, you have to pay for your deductible first which is in our case, $1,000. Policies of car insurers may include deductibles ranging from $100 to $1,000 but are only applicable to collision and comprehensive coverage.

Deductibles are important parts of a car insurance policy. Apply for deductibles which you can handle and which will be useful for you as a car owner or car user. Remember that a higher deductible would mean lower monthly premium payments and thus, it is commendable especially for high-risk individuals. These deductibles will not help the insurer; rather, its purpose is to help the insured individual so don’t be afraid to set high deductibles since it will be of good help for you in the future.