What is a deductible?
A deductible on your insurance policy is an out of pocket expense in case of a claim. You pay your part (deductible) and your insurance company pays for damages above that amount.
Which deductible should I choose?
Most common deductible on auto insurance policies is $500. However, you can choose a higher deductible which can reduce your insurance premium.
What is the purpose of a deductible?
A deductible is there to reduce the frequency of filing small claims against an auto insurer. It spreads some of the risk to the insured to keep the insurance premiums low.
When do I pay the deductible?
You are responsible to pay your deductible after a claim. With auto insurance, you pay your deductible and your insurance company will pay for the damages in excess of that amount. If your damages total $5,000 and your deductible is $500, your insurance company will pay $4,500 and the remaining $500 is your responsibility.
What is my vehicle is declared a total loss?
In case where your vehicle is totaled after an accident, your insurance company will reduce the final payout to you or your lien holder by the amount of you deductible.
What if the accident is not my fault, do I still pay my deductible?
Well, that depends on couple of factors. If the at-fault party does not have auto insurance, you still may be responsible for your deductible, since your insurance company will be paying the damages. If the accident happened in a state that has No-Fault Laws, where insurance companies pay claims to their own policy holders regardless who was at fault, then your deductible may still apply. You can find here more information on different No-Fault Auto Insurance Laws.
Do I have a deductible with liability only auto insurance?
No, the deductible is only part of a comprehensive/collision policy or just comprehensive policy. With liability auto insurance, your insurance company does not cover damages to your vehicle, only the damages you cause to the other party.
Few states offer Uninsured Motorist Property Damage coverage as well.
Why does my lien holder want $500 deductible?
Some lien holders may have a requirement when financing your vehicle to keep your deductible at $500 or less. This is mostly to make it easier for their customers to come up with the money to pay the deductible. A body shop would not release your vehicle after repairs if the entire bill is not paid. If a customer cannot come up with, say a $1,000 deductible, it would create a problem of you getting your vehicle back.
Do I save money by choosing a higher deductible?
Yes, since you would pay more out of pocket in case of an accident, the insurance companies will give you a break on your insurance premium. Premium difference varies between insurance companies, so make sure to ask about the savings amount.
Why does my auto insurance policy have 2 deductibles?
One deductible is for your comprehensive coverage, which covers your vehicles against damages other than collision (i.e. fire, theft, hail damage). The other deductible is for collision with another vehicle or object. Comprehensive and collision deductible do not have to match, you could have a $100 deductible on comprehensive and $500 on collision coverage.
Do I have a deductible on medical bills?
If you have a medical claim with your auto insurer, you will not have a deductible. Your deductible only applies to property damage.
Bargain Insurance Connection is here to help you with any questions you may have about auto insurance and deductibles. Gives a call at 816.453.7722 for free quote.