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Understanding Auto Insurance Deductibles

Learn About Auto Insurance Deductible before Buying Insurance Policy

Auto insurance deductibles are an essential component of any vehicle insurance policy, and yet they're very often misunderstood. When you're shopping for vehicle insurance, you have to know about deductibles. A deductible is quite simply the dollar value that you'll have to pay out on a claim before your insurance company steps up to the plate and covers the rest of the loss.

Is There Always A Deductible?

No. If you're only carrying liability insurance, you don't have to worry about a deductible. If, however, you're carrying collision coverage, comprehensive coverage, or both, then you will have a deductible for each, and the deductible that you choose will affect your rates and your financial obligations with certain types of claims.

Higher deductibles usually mean lower premiums for your auto insurance, because you're assuming a larger part of the responsibility in the event of a claim, while the insurance company pays out less. Comprehensive coverage is usually not as expensive as collision, so the deductible is lower, and you end up paying less out of your own pocket in the event of a claim for theft, vandalism, or anything else that isn't collision-related.

When Does a Deductible Apply?

With collision, it's pretty straightforward. If you're partially or completely at fault, and your collision coverage has to be used to repair your vehicle, you're responsible for the deductible amount. If you're not responsible, then the other driver's insurance pays for the damage, and the deductible is not relevant.

With comprehensive insurance, it's a bit different. With comprehensive coverage, you'll almost always be responsible for the deductible. This is because with a comprehensive claim, you're asking for compensation due to fire, theft, vandalism, or any other occurrence that doesn't involve a collision - there's no other driver involved, and therefore no other insurance company. You're responsible for the deductible.

If You Weren't At Fault, Why Should You Have to Pay?

Often, drivers feel that if they didn't cause the damage, they shouldn't have to pay. Unfortunately, you do have to. The car insurance deductible is one way that insurance companies are able to keep rates lower, generally speaking, for everyone.

How To Choose Your Deductible?

When you're thinking about how much you want to pay in terms of a car insurance deductible, you have to think about how much money you'll save year after year, as opposed to how much you're going to end up paying out of pocket if you do have to make a claim. It's all about balance. Choosing a higher car insurance deductible gets you a lower premium, and if you go claim-free for a number of years, then the money that you'll save over that period of time means that you're ahead of the game. Of course, if you do end up in a situation that results in a claim, you will have to absorb the out-of-pocket cost.

Ask For Quotes

To save money on your car insurance deductible, when you're shopping for vehicle insurance, make sure that you get quotes with a variety of different deductible levels, assuming that everything else is pretty much equal. This way, you can see what the difference is in the rates for auto insurance. Sometimes, the difference might not be sufficient to make it worthwhile having to pay a lot more out of pocket if you should have to submit a claim. Make sure that you choose a car insurance deductible that will work for you if you do have to make a claim, and one that you can live with on a regular basis. That way, you'll be sure that you'll get the best deal for your vehicle insurance. As always, feel free to ask our insurance agents for advice on how to make the best decision.