What is a deductible? A deductible is the amount of money you need to pay out-of-pocket before your auto insurance starts to pay the bill after a claim. That means after you’ve paid your deductible, your insurer will cover the rest of your bills up to the limits of your coverage.
How Do Deductibles Work
When a property damage policy is written, you will be asked to choose from certain deductible amounts. These amounts may vary from zero to $2,500 (if you really want to have the lowest premium possible). But people commonly choose the $250, $500, and $1,000 deductibles.
What that means is that if you get in an accident and file a claim worth $4,000 in damages, you’ll need to pay $250 upfront to the repair shop first before your insurer will write a check for $3,750 to the repair shop to cover the bill.
However, if the deductible is totaled and your car is worth $4,000, your insurer will pay out the claim of repairing your vehicle. You will then receive a check of $3,750, instead of $4,000.
You should also consider your deductible when you make a claim. That is, if an accident caused you $150 in damages, you don’t need to file a claim as the amount is less than your deductible.
The Right Amount of Deductible
Keep in mind that the lower your deductible, the higher your premium will be, and vice versa. The key to finding the right deductible for you is to determine your ability to pay should an accident happen to keep your premium in a comfortable range for your monthly budget.
Most insurance experts recommend that insurance should only be used for large claims and not the small ones. Cover the cost of minor accidents on your own to keep your premiums in check. If you make a claim for every minor damage, your insurer may be raising your rates due to excessive claims. That may result in non-renewal.
No one size fits all when it comes to insurance. In most cases, choosing a $1,000 deductible is a wise choice, but make sure to set aside that amount of money in case of an accident. If you can’t save that amount, consider reducing your deductible within your budget.
When shopping for insurance, always consider affordability without compromising coverage. Compare quotes and coverage from different insurers.
Cornerstone Insurance agency is an independent agency with a list of insurance carriers that offer affordable insurance to choose from. Our auto insurance policies can be tailored according to the needs and budget of our clients. If you want to know more about our offers, you may contact us at (770) 413-0807 or visit us today. You may also get a free online quote by clicking here.