One of the most important parts of a car insurance policy is the deductible. For many drivers, it also happens to be one of the most confusing topics, too. Simply put: The deductible is a key part of your policy that directly affects how much you spend, or save, after an accident. Whether you’re choosing a low deductible to keep repair costs manageable or a high one to lower your monthly premium, understanding how deductibles work is key to making smart decisions about your coverage.
What is a car insurance deductible?
Your deductible is your share of the cost in the event of a claim. It’s what you pay “out of pocket” before your insurance starts paying. A deductible isn’t the same as your premium, which is what you pay to maintain your policy. You may have to pay your deductible every time you file a claim.
When you purchase your policy, you select your deductible amount. Each coverage option you purchase has its own deductible, so you can select a different amount for each option, and you can always raise or lower your deductible.
High deductible vs low deductible
Your premium is related to your deductible. A low deductible means you pay less in the event of a claim, but your insurance premium will be a little higher. Raising your deductible will lower your policy’s premium.
However, this means you’ll need to pay more out of pocket if you need to file a claim. You risk spending more money on claims when you take on a higher deductible.
There are still advantages to having a low deductible. While you may pay more each renewal, you pay less out of pocket when you file a claim.
Plymouth Rock offers deductibles from $100 to $2,500, but the most common deductible is $500.
Deductibles can vary by coverage and state. Please contact us to learn more about deductibles specific to your policy.
Will my car insurance cover windshield repair?
Windshield damage is one of the most common comprehensive claims made, and many insurers offer separate windshield deductibles. At Plymouth Rock, you can select a $0 windshield deductible, which means you won’t have to pay to replace a windshield in a covered loss. We also offer a $100 Glass Deductible option which applies a $100 deductible for glass only claims.
What is the right deductible for me?
There isn’t one right answer to choosing a deductible. Some factors to consider are your financial situation and tolerance for risk. No one can anticipate when or where an accident will happen, so consider how much you’re comfortable paying in the event something does happen.
If you want to avoid a sudden expensive repair bill, having a low deductible might be better. A lower deductible can also be a smart choice for drivers with older, low-value cars.
A higher deductible means a lower insurance bill, but be sure you can afford to pay for sudden expenses. Increasing your deductible can be a good way to lower your insurance costs while maintaining full coverage.
What types of insurance are impacted by deductibles?
Deductibles typically apply to your non-liability coverage. Collision and comprehensive coverage are the most common types of insurance that are impacted by deductibles. Collision coverage pays for the cost to repair or replace your car after a collision with another vehicle or object. Comprehensive coverage pays for damage to your car not related to a collision.
Coverage impacted by deductibles:
- Collision
- Comprehensive
- Personal injury protection/medical benefits
- Uninsured/underinsured motorists
- Make and model
- Safety features
Other types of insurance impacted by deductibles may include personal injury protection, medical payments coverage and uninsured/underinsured motorist coverage.
Deductibles do not affect liability insurance, which protects you if you’re responsible for injuring someone or damaging someone’s property.
Comprehensive coverage pays for damages including:
- Fires
- Theft
- Vandalism
- Natural disasters and storms
- Damage caused by hitting an animal
How do deductibles work?
Each time you file a car insurance claim, your deductible comes into play. Think of it as your share of a bill you’re splitting. After you meet our deductible, your insurance company will pay the remainder of the covered expenses. For example, if your vehicle suffers $2,000 in damages and your deductible is $500, you will pay $500 and your insurance will pay the remaining $1,500 to repair your car.
Your insurance will not pay for anything until the deductible is met. If the cost of the damage is below your deductible, you will be responsible for paying for the entire cost. For example, if your vehicle suffers $400 in damage and your deductible is $500, your insurance will not pay for any of the repairs.
If you damage someone else’s car, your property damage liability coverage will pay for their repairs. You don’t pay a deductible for this liability coverage. If your own car is damaged as well, your collision coverage will pay for repairs after you pay your deductible.
Accidents with another driver
Generally, if your car is damaged by another at-fault driver you can pursue damages from their car insurance company. That company must first conduct their investigation into liability for the claim. It may take weeks or months before you receive the money to repair your car.
Instead, you can file a claim with your own insurance policy to get your vehicle fixed faster. You will pay your deductible if you choose to go through your own insurance company. Your insurance company will then seek reimbursement from the other driver’s insurance company. If the process is successful, you may receive a refund for all or part of your deductible, depending on the circumstances of the accident.
Hit-and-run accidents
In the case of an accident caused by another driver who is uninsured or unidentified, you will not have the option of filing a claim with the responsible party’s insurer. In that case, you can file a claim with your insurance company if you have collision coverage, but you would be responsible for your deductible.
Find the best car insurance for your budget
If you’re looking to save money on your car insurance premium, raising your deductible can help. A higher deductible may lower your car insurance premium. This is because you’re responsible for paying more in the event of a claim.
Still need help figuring out what deductible is right for you? Give us a call. One of our insurance experts will be happy to guide you through your coverage options. If you’re looking for even more ways to save, we can help you with that, too!
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