Insurance can be a lifesaver in times of need, but it can also be a bit confusing when it comes to understanding all the different terms and conditions. One term that often comes up is “deductible.” So, what exactly is a deductible, and how do you choose the right one?
Simply put, a deductible is the amount of money you have to pay out of pocket before your insurance coverage kicks in. For example, let’s say you have a car insurance policy with a $500 deductible. If you get into an accident and the total cost of repairs is $2,000, you’ll have to pay $500 of that cost, and your insurance company will cover the remaining $1,500.
Factors to Consider When Choosing a Deductible
Now, choosing the right deductible can be a bit tricky. On one hand, you want a lower deductible so that you don’t have to pay as much out of pocket if something happens. On the other hand, a lower deductible often means higher monthly premiums (the amount you pay for your insurance coverage each month).
So, how do you go about choosing the right deductible for you? Here are a few things to consider:
- Your budget: How much can you afford to pay out of pocket if something happens? If you don’t have a lot of extra money sitting around, a higher deductible might not be feasible.
- Your driving habits: If you have a long commute or live in an area with a high risk of accidents, you might want to consider a lower deductible.
- Your insurance history: Have you had a lot of accidents or claims in the past? If so, a lower deductible will most likely be more costly to you. It might be better to consider a higher deductible to mitigate insurance costs.
- Your comfort level: Some people just feel more comfortable with a lower deductible, even if it means paying more each month. Totally up to you.
Why Are There Different Deductibles?
If you are looking over your auto insurance policy, and see a number of different deductibles, its because companies break things down into different claims scenarios. Here is quick overview:
- Comprehensive Deductible: Sometimes we see these referred to as other then collision claims. Most cases, this is for a claim that occurs as a result of something falling on your vehicle, or making contact with a animal (deer are the big ones we see!)
- Collision Deductible: Think of it is the deductible you pay when your car hits another car or object.
- Glass Deductible: Many times these claims are subsets of comprehensive claims. In most cases carriers offer a $0 or $50 glass deductible
- Uninsured Motorist Property Damage Deductible: Many cases, this deductible cannot change. This comes into play when an accident occurs with a uninsured motorist. Most times we see this in hit and run situations.
Ultimately, the choice of deductible comes down to your personal preferences and circumstances. It’s important to weigh the pros and cons of each option and choose the one that makes the most sense for you.
Takeaway
Like many things with insurance, options of coverage can be overwhelming. Deductibles can always be adjusted as circumstances change. As a whole, if customers do not have a specific request for deductibles, we quote with our standards which are $100 comprehensive deductible and $500 collision deductible. Typically as long as a carrier allows for it, we are including glass coverage as well.
Every circumstance is different. Reach out to our team to find the best option for you!