Two main costs to consider when shopping for car coverage are policy premium and deductibles.
The policy premium is the amount you pay an insurance company to provide the policies coverages and features. This is a recurring charge to maintain your policy. However, it may change at your renewal period depending on your personal metrics and the company’s current rates.
A deductible, on the other hand is an amount that you might owe in case you have an auto insurance claim. Different coverages may have a different deductible.
The choice of an auto insurance deductible is personal and can be influenced by your budget. These are important considerations when choosing the right deductible for you.
What is an auto insurance deductible?
A car insurance deduct refers to the amount you agree to pay from your pocket for repairs or replacement after an accident. You are responsible for $500, while the insurance company will pay $4,500 if your vehicle is damaged by an accident that causes $5,000.
Before you finalize your auto insurance policy, you should discuss your insurance deductible with your agent. You should be able to modify your deductible at any moment.
What are the different types of car insurance deductibles?
An auto insurance policy can include a variety of coverages. Certain coverages, such as liability, cover the victim for any injuries or damages that they cause. Other coverages, such as collision, comprehensive, personal injury protection, and uninsured motorcyclist property damage, can help to cover injuries to others in your vehicle or damage to your car. These coverages might have deductibles or the option to include one to lower the cost of coverage.
These are some coverages that typically have a deductible, or allow you to choose one.
Collision
Optional Collision Coverage covers damage to your vehicle caused by a collision with an object (e.g. telephone pole, guardrail, mailbox, building, etc.) that you cause. Collision coverage does not cover mechanical failures or normal wear and tear on your vehicle, but it will pay for damage caused by potholes or rolling.
According to the Insurance Information Institute (Triple-I), collision coverage costs an average of $300 per year. The deductible on your policy will be applied if you file a claim to repair damage to your vehicle as part of collision coverage.
Comprehensive
Optional comprehensive coverage protects against theft or damage to your vehicle that is not caused by a collision. This covers fire, floods, vandalism and hail as well as falling rocks or trees, and other hazards such hitting animals.
The average cost of comprehensive insurance is less than $200 annually, according to Triple-I. The deductible on your policy will be applied if you file a claim to repair damage to your vehicle.
There are many situations where a deductible is applicable, but there are also some cases in which your comprehensive deductible doesn’t apply. Your insurer will fix a chip or crack in your windshield with no deductible in Florida. South Carolina is the same. Certain insurers offer comprehensive coverage with zero-deductible. This means that you won’t have to pay any deductible if you file a claim for comprehensive damage, but your premium will increase.
Uninsured/underinsured motorist property damage
If you are involved in an accident with an uninsured driver or one without enough coverage to pay for your car’s damage, or in the case of a hit-and-run, you may be able to file a claim under your uninsured/underinsured motorist property damage coverage. Although this coverage is not available in all states, it may be available in certain areas. It is usually between $100 and $300 in cases where a mandatory deductible applies.
Personal injury coverage
You may be eligible for personal accident protection (PIP), coverage depending on the state you live in. This coverage covers medical expenses for you as well as all passengers in your car. This coverage can also be used to pay for lost wages and to help with household chores if you are unable to work. You may be subject to a deductible depending on the state you live in. There are many options for PIP deductibles in different states. The deductible you choose will impact your premium.
What types of car insurance do not require a deductible?
Liability coverage covers injuries and property damage to the other party or parties in case you are at fault for an accident. You can choose a certain amount of liability coverage when you purchase coverage. These coverage limits determine the maximum amount that the insurance company will pay to the other party in the event of a covered claim. There is no deductible because liability coverage covers all people you injure and cause damage to.
You can choose to add optional coverages such as roadside assistance and rental car coverage. However, you may have coverage limits or caps that limit the number of claims you are allowed to file.
What is the average deductible for car insurance?
Most drivers have policies that include $500 collision and comprehensive deductibles. However, there are often other options. Many companies offer options for deductibles of $250, $500 or $1,000. There are many options available for deductibles. Some companies even offer a $0 or $100 option. You don’t have to match your collision and comprehensive coverages. It is common to have a $100 collision deductible with a $500 collision, or a $500 comprehensive and $500 collision deductible.
The amount you end up paying will depend on the amount you have set aside each month for car insurance and the amount you are able to pay out of your own pocket in case you need repairs. The deductible is generally higher than your premium. When choosing a deductible, it is important to take into account your financial situation.
Consider these factors when choosing a deductible for your car insurance
When choosing the deductible amount for your auto insurance, there are many things you should consider. Some of these are covered here:
Are you looking to save money on car insurance and repairs?
Higher deductibles will generally lower the premium . However, you will have to pay more out-of-pocket expenses if you file an insurance claim for vehicle damage. You may be able to claim your deductible, but you’ll have to pay the full amount out-of-pocket. If you hit a tree and cause $350 damage to your car, and your collision deductible exceeds $1,000, you will have to pay the entire cost of repairs.
A lower deductible will result in a higher car insurance premium, but it will save you money if you have to file a claim. If you have a $100 deductible and cause $350 damage to a tree by backing into it, your insurance will only pay $100. The other $250 will be paid by you. You could also spend more on your premium if you have a lower deductible, but never file a claim. This is the nature insurance coverage, and an example of the risk you and your insurer accept.
What is your budget?
It is crucial to determine how much you can afford to cover the cost of your car if it is involved in an accident before you decide on a deductible. You should choose a $500 deductible. You may not be financially able to repair your vehicle if it is damaged or you are at fault.
Is there a deductible requirement for your lender?
You will need collision and comprehensive coverage if your vehicle is financed. You will need to select deductibles for each type of coverage. You may be limited by the maximum deductible you can carry for collision and comprehensive. You should check with the financial institution handling your loan or lease to see if there are any restrictions.
What are the exceptions to your obligation to pay your car insurance deductible?
You may not be required to pay your deductible on occasion, but these are rare. You will not have to pay your deductible if you:
The other driver is responsible
If you are the victim of an accident and another driver hits you, you will not have to pay a deductible if you file a claim through their insurance company. Only when you file a claim with an insurer do your deductibles apply.
You have a decreasing deductible
A diminishing deductible or vanishing-deductible option is offered by some insurance companies. This policy feature allows you to reduce your deductible by increasing the time you are without an accident. It is usually a $100 credit that you apply to your deductible each year that you aren’t in an accident. For example, if your collision deductible is $500 and you don’t have an accident in the last four years, you might receive a $100 reduction each year. If you had to file a claim and your deductible was $500, it would be $100. There is usually a waiting period before you can apply for your diminishing deductible again. Talk to your agent or carrier representative about whether this feature is available.
Questions frequently asked
What does it mean if you have a $1,000 collision deductible?
If you have a $1,000 collision deductible, you will have to pay $1,000 out-of-pocket if your claim is approved. If you file a claim for $5,000 worth repairs, you’ll pay $1,000, and the insurance company will pay 4,000.
Is there a deductible you have to pay if you are involved in an accident with another vehicle?
You may have a variety of coverages that can cover you if you hit another vehicle while you are at fault for the accident. The damages to the other person will be covered by your bodily injury liability or property damage liability. These coverages don’t have a deductible. If you have collision coverage, and you need the insurance company to cover your vehicle’s repairs, your collision deductible will be required.
If you are not at fault, do you have to pay a deductible?
It depends on the facts. The other driver is responsible for the accident. Their liability coverage should cover your damages. You should not be required to pay adeductible. You may have to pay a deductible if the other driver has no insurance or is underinsured. This depends on the coverage you have. You can use your collision coverage to cover your damages if the other driver denies your claim or if your claim is complicated and takes a while to settle. Your insurance company will cover your damages up to the amount of your deductible. Then, you can ask the at-fault driver’s insurer for the money back through a process called subrogation.