The Basics About Deductible vs. Out-of-Pocket Car Insurance Expenses
If you want the most affordable car insurance, determining your deductible is an excellent way to keep the price down and stay covered. But sometimes figuring this out can be confusing. What is a deductible for car insurance, anyway?
A deductible is a set amount that you must pay up front when making a claim on your insurance, and the rest of the expenses will be covered by your insurance. A deductible is commonly included in Collision and Comprehensive coverage. Typical deductibles range from $100 to $1,500, and the higher your deductible is, the lower your premium will be.
Let’s look at an example. You get into a collision that caused $4,000 worth of damage to your vehicle. Your deductible is $500. You would pay $500, and your insurance will pay the remaining $3,500 in damages. Your car’s ACV, or actual cash value, is considered in this situation as well. As long as the amount of damage does not exceed your vehicle’s ACV, which takes into account your car's age, its condition, and the amount you paid for your car, your deductible and insurance will cover all damages.
Finding the right deductible amount for you is based on a variety of things. First, you must know your budget. How much cushion do you have in your bank account that you can spend in case of an accident? You don’t want to max out on a bad month, so know your limits while keeping in mind that the deductible affects your premium rate.
This is one of the reasons that being a safe driver is the best way to secure yourself financially. If you have a good driving record with a low risk of accidents and have a bit of savings, you will always have affordable car insurance.
And as always, you should check around different providers’ options and find which one will offer you the best deal on car insurance accompanied by the best personal service. The process may take a little extra effort, but will pay off if anything should happen to your vehicle.