Deductibles: The Mysterious and Puzzling Numbers of Insurance
Like most people, you may not understand your car insurance deductibles and how they work. Plus, if you’re driving down the road in Fayetteville, Arkansas, and are involved in a wreck, you may not know exactly what you’d be expected to pay for damages. That can be a scary thought, but never fear, G&G Insurance is here! Let’s solve the mystery behind deductibles.
How Does a Car Insurance Deductible Work?
A deductible, whether it’s for your car or your home, is what you are responsible for paying if you have an accident or file a claim. For example, if you have a $1,000 deductible and your car accident results in $2,500 in damage, you would pay $1,000 and your insurance provider would cover the remaining $1,500.
Before filing a claim, have an appraisal completed on the damage to understand how much it will cost to repair your vehicle. Getting an estimate first can help you decide whether filing a claim is the best option.
For example, if it will cost you $300 to repair your car and your deductible is $500, it may not be worth filing a claim since you would still have to cover the repair costs yourself. Your car insurance rates could increase when you file a claim, so it’s important to understand the costs before moving forward.
Understanding your deductible is just one part of choosing the right auto coverage. Learn more about your options in our guide: G&G Gab: Car Insurance and What You Need to Know.
Whether you have one or 10 car accidents, you are typically required to pay your deductible with most claims. If your car is totaled, your insurance company may pay you the current value of your vehicle minus your deductible.
The two most common coverages that include deductibles are comprehensive and collision coverage. Some states also use deductibles for personal injury protection or uninsured/underinsured motorist property damage coverage. The same general rules for deductibles apply to these types of car insurance coverage in Fayetteville, AR.
Generally, you only have to pay your deductible if your own vehicle is damaged, not the other person’s vehicle. A simple rule to remember: your insurance company pays, and you pay your deductible.
Is There a Situation Where I Don’t Pay My Car Insurance Deductible?
There are some situations where you may not have to pay your deductible, including:
Another Driver Hits You
Imagine this: you’re driving through Fayetteville, Arkansas, when another driver runs a red light and hits your brand-new truck. If the other driver is found to be at fault, their insurance company may cover the repair costs, and you may not have to pay your deductible.
However, if you are in an accident where you and the other driver are both at fault, you may have to pay a portion of your deductible depending on the circumstances.
You Decide Not to Repair Your Car
Whether you are required to repair your car depends on your insurance provider and policy. Some insurers may pay you for the cost of repairs minus your deductible, even if you decide not to repair the vehicle. Others may require proof that repairs have been completed.
Also, if you have a loan on your vehicle, your lender may require you to repair your car.
How Does My Car Insurance Deductible Impact My Price?
Now you have to find the right balance with your deductible. When you choose a higher deductible, you generally have a lower car insurance rate, and when you choose a lower deductible, you typically have a higher premium.
However, a higher deductible also means paying more out of pocket if you have a car accident or file a claim. Be sure to ask your insurance provider about how different deductible amounts may impact your premium.
Your deductible is only one factor that affects your car insurance costs. Other factors, including your driving record, coverage limits, and vehicle type, can also impact your rate. Learn more about what influences your premiums in our article: The Lowdown on Your Car Insurance Prices.
How Much Should My Car Insurance Deductible Be?
There are many options when it comes to your deductible. Typically, deductibles range from $100 to $2,000, with a $500 deductible being a common choice for many drivers.
If you are unsure what your car insurance deductible should be, ask yourself whether you would rather pay less for your insurance premium or pay less out of pocket after an accident.
Another factor to consider is how much you can afford to pay if you experience a wreck. Your deductible should always be an amount you can comfortably afford if you need to file a claim.
Lastly, think about how likely an accident or claim is for you. Do you live in a busy area? Do you drive frequently? Have you been in an accident before? If you often drive on busy roads or have a history of accidents, you may want a lower deductible so you can reduce your out-of-pocket costs when you need repairs.
Choosing the right deductible is an important decision, but it is only one part of having the right insurance coverage. Learn more about finding the right amount of protection in our guide: How Much Car Insurance Do I Need?.
Deciding on your deductible is a big deal. If you’re still unsure what the best deductible is for you, ask your Insurance Advisor for their recommendation and review your financial situation.
If you have questions or want to see how much your car insurance rates would be with a certain deductible, give G&G a call today!