Auto insurance is a mandatory requirement for all car owners, and the average expenditure has continued to increase year after year since 2007.
So, when shopping for insurance, one of the decisions you’re going to make is the amount of your deductible. This can be any amount between $100-$2,000. As such, you get deductible car insurance, which is basically a plan whereby you have to pay a certain amount (deductible) towards repairs before your insurance covers the rest.
Read on to learn more.
About Auto Deductibles
One thing you must to know is that deductibles vary according to your premium and the terms of your policy. Plus, every insurance company have their own conditions regarding deductibles. You also need to know that your deductible can only be used on your car and not someone else’s.
However, you don’t have to pay your auto deductible all the time. For example, when another driver hits your car and they’re at fault, their insurance company is responsible for paying for the damages. If you and the driver were both at fault, you’d co-share the deductible.
Also, if you choose not to repair your car, your insurance company might give you a check for the repair cost minus your deductible. Keep in mind that you’ll need repairs if you’re financing your car.
A Typical Scenario
Let’s say you’re involved in a car accident, or you crash your car into a tree or building. You take your car for repairs, and your mechanic gives a quote of $3,000. In this case, if you have a deductible, you will share this repair cost with your insurance company.
Assuming your deductible is $1,000, you’ll have to pay $1,000 towards repairs and your insurer will pay the rest, $2,000. Regardless of the repair cost, you’ll only need to pay your deductible. Essentially, when you get involved in a crash, the insurance will pay for repairs up to the limit of your policy.
High vs. Low Deductibles
When paying your deductible car insurance, you may consider lowering or increasing the amount depending on your budget. If you have a tight budget, then increasing your deductible is usually the best option. This is because you’ll pay lower monthly premiums.
Even though this is a cost-cutting measure, it might not be in your best interest. Typically, you have to choose an amount that you’ll be able to afford and pay comfortably in the event of a crash.
On the other hand, a low deductible means your monthly premiums will be slightly high. Whatever your choice, the amount you will pay depends on your budget and any benefits you see.
Deductible Car Insurance – The Takeaway
When it comes to buying auto insurance, it’s all about what you want. Whether you want a low or high deductible, that’s your choice. The most important thing is how much you can afford to pay out of pocket. You don’t want to keep your car in the garage because you can’t afford the deductible.
Also, the most important thing is driving safely. You won’t need to worry about deductibles if you rarely experience crashes.
Do you want to learn more about deductible car insurance? Check out our auto insurance page for more information.