A deductible is the amount of money that you are responsible for paying out of pocket before your insurance company will cover the rest. This is a type of out-of-pocket expense.
A deductible can be anything from $50 to $1000. The higher your deductible, the less you’ll pay in monthly premiums. But if you have a high deductible, and get into an accident, then you will have to pay the entire cost upfront before your insurance company will cover any expenses.
What are the Different Types of Car Insurance Deductibles?
There are three types of car insurance deductibles. They are the collision deductible, the comprehensive deductible, and the liability deductible. The collision deductible is for accidents that occur in your car. The comprehensive deductible is for accidents that occur outside of your car. The liability deductible is for accidents that happen to other people’s cars or property. This all depends on the kind of coverage you have on your policy.
The main benefit of collision and comprehensive deductibles is that they can save you money on your monthly premium. However, they also increase the amount you pay out-of-pocket if there’s a claim on your policy. This means you’ll have to pay more out-of-pocket if you want a lower monthly premium but higher out-of-pocket costs.
How Much Does a Deductible Cost?
A deductible is the amount of money you are responsible for paying out of pocket before your insurance starts paying. This means that a higher deductible will mean lower monthly premiums, but higher out-of-pocket expenses if you need to use your insurance.
A deductible can be set in two ways: per incident or annual.
The per-incident deductible means that the person pays the initial amount for each incident (i.e., each time they go to the doctor).
The annual deductible means that the person pays once a year for all incidents and then their insurance kicks in from there on out.
A high deductible on a low value car might actually end up costing you more money when it comes time to repair your vehicle.
How to Choose the Right Deductible for You
There are two main types of deductibles: fixed and variable.
The fixed deductible is a set amount of money that you will have to pay before your insurance coverage kicks in. For example, if your deductible is $500, you will have to pay the first $500 for your insurance company to cover anything.
The variable deductible is calculated based on the percentage of the total cost of the claim you are responsible for.
The most important factor when choosing a deductible is how much you can afford to spend upfront before getting reimbursed by your insurance company. If you have a high-risk tolerance and can afford it, then opt for a higher deductible so that more of what you spend goes towards paying off medical bills rather than paying an insurance company.
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The Importance of Understanding Your Car Insurance Deductible
The deductible is the amount of money you agree to pay out of pocket in case of a covered loss. The higher your deductible, the lower your car insurance premium will be. The importance of understanding your car insurance deductible is finding the best coverage for yourself and saving money on your monthly premiums.