What are Car Insurance Deductibles?


 In buying an auto insurance policy the insurance company is not only curious about the kind of car you drive, how you drive that car and how often you get into accidents. They also look at the amount of money you are prepared to pay for your insurance coverage.

Every car insurance policy has a deductible. The insurance company would typically ask you what deductible you want. Auto insurance deductibles are the part of your insurance policy that you are responsible to pay for before the company pays for the rest of the covered loss. Car insurance companies do not pay for everything when you get into an accident. They just help you pay for any damage or injury you cause or obtain while driving your car.

Understanding more about deductibles would help you know how it affects the rate of your insurance policy. There are at least 5 important things you need to know about deductibles.

  • First, when you get involved in a vehicular accident, your car insurance company would not pay for anything not until you pay for your deductible. For example, when you need $5000 to have your car repaired after hitting a tree and your deductible is worth $1000, you have to pay for that $1000 before the insurance company pays for the remaining $4000.
  • Deductible is one of the factors that dictate how much your insurance rate would cost. The higher your deductible is, the lower your insurance rate. However, having a high deductible means you have to pay higher than your insurance company when you get involved in an accident. This type of arrangement is better when you own an old car since the value of older cars are lower and thus getting it repaired costs lower.
  • The lower your deductible the easier it is to pay. Even though choosing a lower deductible means that you have to pay for a higher insurance rate, it will be easier to pay for any damage or injury you get or inflict during an accident. This best works when you own a new car.
  • Comprehensive and collision coverage both require deductibles.
  • Each insurance company offers different ranges of deductibles, although they commonly offer $150 to $1500 deductible. You always have to check and read thoroughly your insurance policy before purchasing them.

 Deductibles can change how much your insurance policy costs, so you have to fully understand them and your policy as well. Also, in choosing a deductible you have to make sure that you select the one you can afford.