What is your current deductible?

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This is a question that you will hear from your insurance provider when you get a quote. Don’t feel weird if you don’t know what a deductible is or how it works. A deductible is a specified amount of money that the insured must pay before an insurance company will pay a claim. All insurance companies have deductibles. Deductibles are a tool to prevent frequent claims or insurance fraud. Your deductible does have an effect on your insurance premium.

How does a deductible work?

Say your deductible is $500. You get into an accident and the Police have declared that the accident was your fault. You have caused $5000 of damage to the other persons car and $5000 of damage to your car. You decide to file the claim with the insurance company. The insurance company will give the other person $5000 for their repair and give you $4500 for your repair. They have deducted $500 to file the claim.

When you are picking a deductible you want to pick an amount that you would be able to afford if an accident would happen. I have seen deductibles from $50 to $1000 on car insurance policies. Sometimes people have lower deductibles for comprehensive coverage than collision coverage. For comprehensive you need to think about how much you could afford out-of-pocket if you had to file a claim due to vandalism, stolen property, or broken windshield.  The most common deductible combination that I see is $250 comprehensive and $500 collision.

Call your independent agent to see what your deductibles are.

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