Renewal time is a great time to take a close look at your auto insurance coverage and premiums. You may be able to find savings by having a thorough understanding of each type of coverage and how to maximize your benefit, while keeping your cost down.
The first place to look is at your deductibles.
What Is A Car Insurance Deductible?
A deductible is the amount you agree to pay should you have an incident, before the insurance company kicks in money. There are two types of coverage that allow deductibles.
- Collision Coverage – Collision covers damage incurred when you hit another vehicle or an object. The payment will cover the cost of repairing your car only, not medical expenses.
- Comprehensive Coverage – Comprehensive covers damages incurred when pretty much anything else happens to car that is not a collision. So, hail damage, damage from trees, fire, theft and vandalism are covered by comprehensive coverage.
The other types of coverage you may have, including liability that covers bodily injury and property damage do not usually have deductibles.
How to Choose the Right Car Insurance Deductible
- The most important thing to consider when deciding how high your deductible can go is if you can afford the payment should something happen. If you can put $1000 away so that it is available to you if something happens, then go ahead and save some premium money by lowering your deductible.
- Remember though, insurance deductibles are on a per-claim basis. This means that if you have an accident and there is $400 damage to your car, you will pay the $500. If you have another accident, with another $500 in damage, you will also pay the full amount. In the end, you have paid $1000 and your insurance company has paid nothing.
What is Subrogation?
Sometimes the fault for an accident is not immediately clear and you need to file a claim right away. So, you go ahead and pay your deductible and get your car repaired. If the investigation determines that the other driver was at fault, your insurance company will attempt to recoup the money it paid from the other insurance company. This is known as subrogation. If it is successful, your insurance company may reimburse you for the amount you paid for your deductible.
Determining the right amount for a deductible for your own unique situation can be tricky. Knowing your car’s value, how much you can afford to pay should something happen and how much risk you are willing to take are just some of the factors that go in to making the choice.
Remember, higher deductibles mean lower premiums, but more money out of your pocket if an accident happens.
To help decide what’s right for you, use InsuranceWins fast and easy quote form to try a few deductible scenarios and see how you might be able to save money.
