How Auto Insurance Deductibles Work
Car insurance deductibles are what you pay before your car insurance coverage kicks in and covers your costs in the case of an accident. Lets say you decided to pay a cheaper monthly premium maybe $75, depending on what state you live in, and what your driving record is like. The downside of that affordable monthly bill is that you will now be paying a higher deductible rate should you get into an accident even if youre not responsible. If youre paying a cheaper rate, you will have a higher deductible and maybe even excess payments. A more expensive monthly premium, and you will have a lower deductible.
Heres another example. Lets say you pay $75 a month for a car insurance policy that has a deductible of $1000. That means that if you get into an accident with damages to your car totaling $2000, you would have to pay the $1,000 deductible before your insurance coverage kicks in and pays for the remaining $1,000. If, on the other hand, you decide to go with a more expensive car insurance coverage that gives you a deductible of $200, you would only have to pay $200 in the aforementioned accident, and the insurance company would have to pay the rest ($1800). It really depends on how much youre willing to pay on a monthly basis for car insurance coverage. Some folks simply cant afford to pay more than the minimum, while others are willing to spend more to get peace of mind, knowing theyre covered in case they get in an expensive accident.
Insurance companies charge deductibles because it allows them to avoid paying out claims in small accidents. This keeps costs down, all across the industry. If everyone were filing for compensation on small accidents or issues, the cost of insurance would go up all around for everyone.
Of course, make sure you speak to a qualified car insurance agent before committing to an insurance policy, or if you have any questions at all about car insurance deductibles or any other aspect of your car insurance.