How Car Insurance Deductible Works

Deductibles work exactly the same for all coverages. Picking your auto insurance deductible is a highly personal decision. Your car insurance deductible is usually a set amount say 500.

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How does your car insurance deductible work.

How car insurance deductible works. Car insurance deductible in a nutshell. The damage to your car comes up at around a 3 000. For example if the cost to repair your car is 2 000 and you have a 500 deductible the mechanic will give you a bill for 500 and invoice the insurance company for the remainder. Learn more about how car insurance works.

Deductibles on your auto insurance are actually not as difficult to understand as you may have thought. Before we explain how car insurance deductible works we first have to define what it is. Car insurance deductibles work the same way for all coverage types and you will get to choose your deductible amount for each. If you own your own car you probably already know a little about car insurance.

You may also have a deductible for personal injury protection or uninsured underinsured motorist property damage in some states. You may have heard the words deductible or premium. When you re talking to your agent about car insurance they may mention a little thing called a deductible you may be a little confused about this amount you may have to pay in addition to your monthly premium but it s vital to the way that insurance works and what can make your policy and your rates work for you. Let us assume god forbid it happens that you have had a car accident.

It is really up to you to weigh your choices and determine the best option for you and your family. With a 200 000 homeowner policy that has a two percent deductible your insurance company will deduct 4 000 from every reimbursement no matter how many occur in the calendar year. But do you truly understand the different parts of an auto insurance policy and do you know how to choose the best coverage. Deductible amounts typically range anywhere from 100 to 2 000.

For example you could choose a 500 deductible for comprehensive insurance which tends to have lower premiums but 1 000 for collision which usually costs more. It depends on your personal comfort level and the amount of risk you are willing to take. If you get in an at fault accident and make a claim to your insurance company for damage to your car then the company will only pay for the cost of repair in excess of the deductible. A car insurance deductible is the amount of money you are required to pay when you file a claim for an insured loss.

Essentially when you have a car accident and file a claim your claim payment will be reduced by the amount of your deductible. As an actuary someone who prices insurance i get asked about them all the time how do auto deductibles work. Whether you re looking to save a few bucks on your insurance premium or you want to reduce your out of pocket risk in the event of an accident it s. It is really simple to understand with an example.

What deductible should i choose for car insurance.