What is a deductible?
What are auto insurance deductibles and how do they work?
When it comes to vehicle insurance, unlike health insurance, there are no annual deductibles to fulfill. When you submit a claim, you are liable for the specified deductible on your insurance. After you have paid your automobile deductible, your insurance will cover the remaining cost of repairing or replacing your vehicle.
For example, assume you have a $1000 deductible on a covered accident and $4,500 in damage. Your insurance company will pay $3,500 to fix your automobile, with you liable for the remaining $1000.
The two most prevalent automobile insurance coverages with deductibles are comprehensive and collision. In some areas, you may additionally have a deductible for personal injury protection or uninsured/underinsured motorist property damage. Deductibles for auto insurance are the same for all coverage levels.
What if my vehicle insurance deductible exceeds the cost of my repairs?
If your auto insurance deductible is larger than the cost of the damage to your vehicle, you will be responsible for the whole cost since the insurer only covers losses over your deductible amount. You may not need to make a claim in certain circumstances.
For example, assume your auto repairs total $750, but your deductible is $1,000. Because the cost of the repairs is less than your deductible, you will pay for them completely out of pocket.
Car insurance deductibles: high vs. low
Deductible levels for auto insurance generally range from $100 to $2,000. The most popular deductibles are $500 and $1000, but there is no right or wrong answer. The cost of your premium will change a lot based on the deductible you select, a $1000 deductible could save you $100 to $200/yr versus a $500 deductible. So, you're saving now but could have to put the savings towards a future accident. It comes done to personal preference and if you think you may get in an accident:
A larger deductible means a lower auto insurance rate but more out-of-pocket expenses.
Lowering the deductible results in a higher auto insurance rate and reduced out-of-pocket expenses.
Choose an auto deductible level that you are comfortable with, and be sure you can afford to pay it out of pocket in the case of a claim. It is also critical to evaluate your driving history and the possibility of submitting a claim. You may choose a larger auto insurance deductible to bet against having an accident, but if you've had accidents in the past and often drive on busy highways, you may be more likely to make a claim and pay a deductible so may want to consider a lower deductible.
If you reside in a state where broken or cracked windshields are prevalent (northern states where rocks are used on roads with snow/ice), you might consider having a low auto insurance deductible for windshield replacements. Depending on your state and insurer, you may have no deductible on glass replacement coverage or the option to choose a $0 deductible, which may raise your premium.
When should you pay your auto insurance deductible?
When you make a claim under a policy that has a deductible, you must pay your deductible if the harm is covered and costs more than your deductible amount. Your deductible will usually be deducted from your compensation by your insurance carrier. In most cases, you do not need to send a check or make a payment to your insurance. They simply deduct your deductible from the approved payout on your claim. Assume you have a $7,000 claim that has been authorized, and your deductible is $500. In that instance, your insurance company will pay you $6,500.
If I struck an automobile, must I pay a deduction?
If you cause an accident but do not damage your vehicle, you will not be required to pay a deductible. In this case, your liability policy would cover the other driver's injuries and property damage, with no deductible. If, on the other hand, your car is damaged in the accident and you decide to make a collision claim, you must pay your collision deductible.
If I'm not at blame, am I paying a vehicle insurance deductible?
If you officially consider the other driver to be faulty, your insurance company can pay for your insurances if you submit them and you will not have to pay the deduction. If you're covered for a collision, you can pick your own insurer who will pursue payment from the other driver's insurance company, including your deductible. You may wind up paying all or part of your vehicle insurance deductible in cases when blame is shared.
Please keep in mind that if a driver hits you uninsured or under-insured, your coverage of motor vehicle damage may be deductible in some jurisdictions.
Other non deducible situations
In the following circumstances, you will not get a car insurance deductible:
Another individual claims against your coverage of liability - No auto insurance claim is deductible, meaning that you don't pay out-of-pocket for an accident in which your insurer pays up to the limits of your policy for any damages and/or injuries you have caused to another person.
You choose a deductible that disappears - Some insurers provide a program that reduces the amount of your deduction for each violation-free policy period. It is a deduction that is vanishing. You will finish up with $0 deductible on full or collision claims after a specific number of insurance terms. However, after making a claim, your deduction will usually be refunded to its original amount.
You can fix glass claims free of charge - In some areas, you can repair or replace your windshield without a deduction or you can choose a $0 deduction for glass claims. Other insurers may waive the deduction if they can fix and not replace your windshield.