When you purchase Car insurance, there are a lot of decisions you will have to make. You’ll have to determine your carrier, coverages, and the amount of each coverage. However, most insurance plans will not fully cover all of the costs following a claim. You’ll also have to choose your deductible. Choosing a deductible is a serious financial decision, so it’s important that you fully understand how to get the best deductible rate for your needs.
What Is An Car Insurance Deductible?
A deductible is the amount you pay out of pocket when you file a claim. Deductibles are designed to help mitigate the costs of your premiums by sharing the expenses with your insurance company. Deductibles range in price. Some car insurance policies have no deductible, while others have a high deductible. You can also pay deductibles on certain coverages like property damage and pay different amounts on other coverages like bodily injury. Your deductible is negotiated with your insurance agent and the amount depends on your financial needs.
Choose The Right Deductible Amount
When determining what deductible to choose there are some things that you should consider:
- You will pay your deductible out of pocket. So if you have a high deductible of $5000, if you file a claim, you will have to pay $5000. If you have a lower deductible of $500, if you file a claim, you will have to pay $500. Think about your finances and your cash liquidity.
- Choosing a higher deductible de-risks your insurance coverage. As a result, your premiums will lower when you have a high deductible. Also, the reverse is true. If your deductible is lower, then your premiums will be higher. So keep in mind your monthly budget.
- If your damage is less than the cost of your deductible, insurance will not cover the claim. For example, if your damage is valued at $500 and you have a $1000 deductible, your insurance will not pay any of the claim.
The best way to think about choosing a deductible is to find a good balance. What can you afford upfront on your premiums, versus what can you afford to pay in the case of an accident. Some people choose to go with a high deductible to save money every month, betting they will not likely get into an accident. While other people choose a lower deductible and a higher monthly premium to feel more financially secure if there is an accident.
Work With Your Car Insurance Agent
The best way to find the right deductible for your needs is to speak with an insurance agent. They will not only factor in your budget, they will assess your driving history and the risks of your local area, to help you refine your deductible strategy.
Contact us
At Panorama our agents work with a variety of insurance carriers to help our customers find a plan with a deductible that meets their financial needs. If you have questions about deductibles, give us a call anytime. We’ll be happy to help!
