Will you go with a lower premium or is it more important to have a lower deductible? Since your deductible is one of the most important decisions you will make in choosing an auto insurance policy it’s important to understand what a deductible is.
What is an Auto Insurance Deductible?
It is the amount of money you are responsible for paying out of your pocket before your car insurance coverage starts to have effect for any claims for insured events. For many drivers, the advantage of securing an auto insurance policy with a high deductible means lower auto insurance premiums but it also poses a higher out of pocket cost in the case of an accident.
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Car insurance companies offer a wide range of options when it comes to a policy deductible. Most consumers have auto insurance coverage with a policy deductible between $250 and $1000 however the typical choices are for a policy with no deductible all the way up to $2,500. When you purchase car insurance is important to consider your monthly budget and your financial resources to find a balance between affordable premiums and the ability to pay a deductible when you least expect it – since most car accidents happen at inconvenient times.
If you can’t afford your deductible then it’s quite possible you may not get your vehicle fixed until you have the money to cover the entire repair bill.
When you become involved in an accident, some driver’s biggest fear is the amount of deductible they will have to pay before their vehicle can be fixed. Since the amount of deductible will depend on your individual policy, it’s important to be educated from the time you purchase a policy. If you decide to pay a lower premium and accept a higher deductible, it can certainly help with your monthly budget but can also open you up to higher costs in the event of a car accident. Many repair shops will not waive your deductible under any circumstances and will make you pay them the costs of the repairs upfront before fixing your vehicle. Some car insurance companies may even waive the deductible in certain situations but you must always be prepared to pay the out of pocket cost (deductible) at any time. Before buying auto insurance coverage it’s important to know how much your deductible is, when you are obligated to pay a deductible and whether or not you can afford the deductible in an unexpected accident.