What Is a Deductible?
<lingo>A deductible is a portion of money the vehicle owner is responsible for when a claim is made. This is the portion you, as the car’s owner, have to pay before the insurance company covers the rest of your claim. Deductibles range in value based on what you choose when you set up the policy. Most auto insurance policies require them, and having one that’s a bit higher could reduce your premium costs. Yet, it’s important to remember you need to have these funds available for you to use if an accident occurs and you need to file a claim.</lingo>
Deductible Clearly and Briefly Explained
Most insurance policies have a deductible or an amount you are responsible for paying when a claim occurs. For example, if you are involved in a car accident, the damage may total $3,000. If you have a deductible of $500, the insurance company expects you to pay the first $500 towards the repairs. It will then pay the remaining amount, in this case, $2,500. If you don’t have the $500, you may not be able to have the work done on your vehicle. That’s why choosing the right deductible is so important.
<twitter>Most of the time, the deductible is one of those features you can negotiate with your insurer.</twitter>
Deductibles are helpful because they reduce the premium costs you pay to purchase a policy. You should never choose a deductible that is higher than what you can afford to pay comfortably. However, a higher deductible may help you get a lower premium on your auto insurance. That means you pay less now, and a bit more if there is an incident and you need to file an insurance claim.
To learn what your deductible is, ask your agent or read through your policy documentation. Most of the time, this is one of those features you can negotiate with your insurer. Choose a deductible that meets your goals and keeps your costs low but is never more than you have available to pay for any losses that occur. Your agent can help you determine how much of savings are possible if you raise your deductible from, for example, $500 to $1,000 or more.