When shopping for auto insurance, keep in mind the policy cost and deductible.
The policy premium is the amount you pay an insurance provider for the policy’s coverages and benefits. This is an ongoing cost that will likely alter dependent on the company’s current pricing and particular metrics.
On the other hand, a deductible is a sum due in the event of an auto insurance claim. Different coverages have deductibles, and these coverages have deductible alternatives.
Your budget may affect your choice of the auto insurance deductible. Consider these variables while choosing a deductible.
A car insurance deductible
A deductible is a pre-determined sum that you agree to pay for car repairs or replacement after an accident. If your car is damaged by $5,000 in an accident and your deductible is $500, your insurance company should pay $4,500 while you are responsible for $500.
Before concluding your auto insurance coverage, discuss your deductible with your insurance agent or provider. You should be able to adjust your deductible at any time.
What are the different auto insurance deductibles?
Your auto insurance policy includes several coverages. Some coverages, like liability, pay for injuries and losses caused by you. Other coverages, like comprehensive, collision, PIP, and uninsured motorist property damage, assist cover injuries to passengers and vehicle damage. These plans may contain deductibles or at least the opportunity to include one to minimize costs.
Among the coverages with deductibles or the ability to select one are:
Damage to your car caused by an object (telephone pole, guard rail, mailbox, structure) is covered by optional collision coverage. While collision insurance does not cover mechanical failure or normal wear and tear, it does cover damage from potholes or rolling your car.
The Insurance Information Institute estimates the average annual cost of collision insurance at $300. (Triple-I). If you file a claim for collision damage, your policy’s deductible will apply.
Optional comprehensive coverage protects against theft and non-collision damage to your car. This includes fire, flood, vandalism, hail, falling rocks or trees, and animal strikes.
The Triple-I reports that complete coverage often costs less than $200 per year. If you make a comprehensive claim for car damage, your policy’s deductible will apply.
While a deductible is often required, there are times when it is not. In Florida, Kentucky, and South Carolina, your insurer will fix a chip or crack in your windshield with no deductible. Certain insurers offer zero-deductible comprehensive coverage, which means you will not be charged for any damage, but your rate will increase.
Uninsured Vehicle /underinsured
Suppose an uninsured or underinsured motorist causes an accident, or a hit-and-run occurs. In that case, you may be eligible to file a claim under your uninsured/underinsured motorist property damage policy. In states where it is available, a state-mandated deductible may apply. If a deductible is required, it is usually between $100 and $300.
PIP coverage may be available in your state. This coverage helps pay for medical bills for you and your passengers. It can also help replace missed wages or expenses incurred when you cannot do home activities due to an accident. If you file a claim, paying a deductible in your state may be mandatory for you. Many states with PIP deductibles offer multiple options, and the one you choose can affect your rate.
What types of auto insurance have no deductible?
If you are at fault in an accident, liability coverage helps cover injuries and property damage to the other party or parties. When purchasing liability insurance, you specify the coverage amount. These are the maximum amounts an insurer will pay for a covered claim. There is no deductible because liability coverage extends to people you injure or damage.
Optional coverages, including roadside assistance and rental car reimbursement, frequently have no deductible, though coverage limitations and claim limits may apply.
A typical auto insurance deductible
Many drivers opt for $500 comprehensive and collision deductibles, but alternative options exist. Most insurers offer $250, $500, $1,000, and $2,000 deductibles. Some auto insurance providers offer deductibles as low as $0 or as high as $100. It’s also OK to have a $100 comprehensive deductible but a $500 collision deductible, or a $500 comprehensive deductible but a $1,000 collision deductible.
It all depends on your monthly budget for auto insurance and how much you can afford to pay out of pocket if you require repairs. The lower the deductible, the higher the premium. When setting a deductible, keep in mind your entire financial situation.
When does your auto insurance deductible not apply?
Rarely you will be compelled to pay your deductible. In general, you won’t have to pay your deductible if another driver hits you and have insurance. Your deductibles only apply when you file a claim.
If your deductible is dwindling
Some insurance providers offer a vanishing deductible option. With this policy, the longer you go without an accident, the lower your deductible becomes. If you are accident-free for one year, you will receive a $100 credit toward your deductible. You may save $100 if you have a $500 collision deductible and don’t have an accident for four years. If you want to file a claim, your deductible is only $100, not $500. After using your declining deductible, there is usually a waiting period. Ask your insurance agent or carrier about this feature and its criteria.
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