Car insurance can be a bit confusing if you are new to owning a car and even if you do have insurance already, you still may not be well versed in the ins and outs of how it actually works. This is completely normal as most people just know they have to have it and what they pay monthly, but aren’t too sure exactly how it all shakes out especially when it comes to deductibles.
Depending on the type of insurance, deductibles can work a bit differently from company to company and the varying types of insurance. In regard to car insurance, a deductible is what you pay when it comes to repairs to your vehicle. In the event of an accident, once you file your claim, your insurance company will pay the difference between the damages and your deductible. The typical deductible for auto insurance is $500 or $1,000.
It is important to understand that a deductible does not apply to liability coverage and only covers damages to someone else’s car in the event of an accident and you are at fault. If you so have to pay your deductible, it’s a good idea to weigh the costs of filing a claim or paying out of pocket. Doing your research will help you to better decide if paying your deductible is a better option than paying out of pocket and how it will affect your premium and if it will save you money in the long run.
Types of Deductibles
If you have collision coverage, it will cover you in accidents that occur from a collision, typically involving property. This type of coverage doesn’t consider fault so you will receive payment for your loss and pay the deductible to your insurance company.
Comprehensive coverage is designed to cover anything that your collision coverage doesn’t cover. It comes into play for things like weather and theft and doesn’t factor in fault but will also need to cover your deductible.
Uninsured property damage coverage is similar to collision insurance by providing physical coverage to your car if you’re in an accident and considered not at fault and the other driver doesn’t have insurance, or their coverage exceeds the amount needed for your repairs.
Deductibles and Insurance Rates
If you have a high deductible, your premium will be lower and vice versa. That is because your deductible represents what your insurance company is responsible for so you lower what they pay when you increase your deductible.
Choosing Your Deductible
When you are choosing your deductible, think about whether or not you are required to have a specific deductible determined by your lien or lease. Sometimes you don’t have a choice depending on the terms of the loan but they are usually $500 or lower.
Another thing you should think about is how likely you are to file a claim. If you are leasing your vehicle, you will want to keep it in the best condition possible. If you have another person driving the car, especially someone with less experience as a driver, a lower deductible might be a better choice.
Reach Out Today!
We would be happy to discuss any questions or concerns you have regarding your deductible or any of your other insurance needs. Please don’t hesitate to reach out to the team at Willoughby Insurance in Buffalo, NY today!