What is a deductible in car insurance?
An insurance deductible is a common term that typically refers to the amount of money you may pay out of pocket before your insurance covers the rest of a claim. For example, if your deductible for a covered accident was $500 and your repair costs $2,000, you would usually pay the first $500 and your insurer would pay for the remaining $1,500. You typically will agree to your deductible amounts for certain coverages before you finalize your policy.
Why do deductibles exist?
Car insurance deductibles may be crucial because they can allow insurers to split potential costs and responsibility with their policyholders. This can also help reduce the number of claims that insurance companies must deal with, since insurers may not have the capacity to respond to or cover every accident. Additionally, deductibles may provide a monetary cushion between a minor loss and severe, expensive damage.
Deductibles can help encourage drivers to operate less recklessly, since policyholders have a personal responsibility to cover a certain amount of damage after an accident. Carriers take on a financial risk by insuring drivers, so deductibles may lessen this risk level.
Common deductible amounts
If you’re choosing auto insurance coverages for your policy, you may be able to customize your deductible amount for certain coverages. For example, some typical amounts for collision and comprehensive coverage are $250, $500, and $1,000. When you choose a higher deductible, you typically will receive a lower premium, since you’re selecting to take on a larger financial risk if an accident occurs.
When do you pay a deductible?
You’ll usually pay a deductible if you file a claim for a covered accident under certain coverages like collision or comprehensive. If the claim is accepted by your insurer, you would pay your deductible amount, and your insurer would typically pay the remaining cost.
You may not have to pay a deductible amount if you have liability coverage and you damage someone else’s vehicle. You typically won’t have a deductible for this type of coverage, but a liability limit. This limit is usually agreed upon between you and your insurer and may also correspond with your state’s minimum mandated liability requirements. For example, your liability limit may be $25,000 per accident, which means your insurer may pay up to $25,000 when you damage someone else’s property.
Another scenario where you typically wouldn’t pay a deductible is if someone damages your vehicle. If the other driver is at fault and their insurance covers the claim, their insurer may cover your expenses.
How Infinity Insurance Agency, Inc. (IIA) can help
Whether you’re looking to update your personal auto insurance policy or you’re a small business owner needing commercial auto insurance, IIA is here to help you find coverage that works for you. Our friendly, Spanish-bilingual agents can help you understand deductible amounts and guide you through your insurance journey.
You can call us at 1-855-478-3705 or head to our website for a free quote online today!
Frequently asked questions (FAQs)
Can I change my deductible after getting a policy?
Depending on your coverage, you may be able to change your deductible amounts after purchasing a policy. Contact your insurance agent to help you figure out if you can increase or decrease your deductible.
Do I have to pay the deductible every time I file a claim?
You typically will have to pay a deductible each time you file a claim for coverage that has a deductible amount.
Is the deductible per year or per claim?
Typically for coverage with deductibles, the deductible you pay usually occurs per claim, not per year.