What Is an Insurance Deductible?

 

How Important is an Insurance Deductible?

When you are in an accident, whether a significant collision or just a minor fender bender, the deductible is the amount you pay out of your pocket toward a covered claim. It is a crucial feature of many types of insurance coverage. Your auto insurance can be challenging to navigate at times. Unlike health insurance, which typically has one deductible to meet each year, the deductible on an auto insurance policy's coverage will apply each time you file a claim. You'll typically find deductibles for certain coverages in your auto insurance policies.

Types of Coverage

Each type of coverage can have a different deductible amount. Deductibles have been an essential part of the insurance contract for many years. Understanding the role deductibles play when insuring a vehicle is integral to getting the most out of your policy. Your insurance policy likely has different types of deductibles. For example, a car insurance policy typically has comprehensive and collision coverage, each with other deductible mounts.

• Collision Coverage: Part of your insurance policy that helps you pay for repairs or the cost of replacing your vehicle if it's damaged in an accident involving another vehicle or an object such as a building or a fence. Collision coverage is required when you are financing or leasing a vehicle through a lending company. Let's say the collision coverage on your car insurance policy has a $500 deductible. You damaged your car in a covered accident. It costs $3,000 to repair. You'd pay $500 toward repairs, and your insurer would cover the remaining $2,500.
• Comprehensive Coverage: This type of insurance coverage differs from collision coverage in that it helps you replace or repair your vehicle if it is stolen or damaged in an incident that is not a collision. Comprehensive coverage typically covers your vehicle from situations such as auto theft, fire, and vandalism. Comprehensive policies also cover falling objects like hail or hitting an animal such as deer. Comprehensive claims will have a different deductible than collision coverage.

Does a Deductible Affect the Cost of Insurance?

Simply put, the answer is yes. Your deductible typically affects your premium or the cost you pay annually for your policy. In most instances, the higher your deductible, the less you will pay in yearly premiums. The reason is that with a higher deductible, you're taking greater responsibility for the expenses of a claim. For example, let's say you file a claim for $3000; if your deductible is only $250.00, The insurer will pay out the remaining $2,750. The insurance company compensates for this by charging you a much higher premium than if your deductible were $500 or $1000.

Talk to Your Insurance Provider

Insurers offer a range of deductibles, and you can typically choose the deductible that fits your needs. According to the Insurance Information Institute (III), the typical deductible amounts for auto insurance coverages are $500 and $1,000. However, payments may vary among insurance companies and policies.

When you need repairs from a collision or other situation, you can rely on Bob Moore Collision Center to navigate your claim and deal with deductibles and payments. We'll take care of your vehicle as our goal is to provide service for our customers in Oklahoma City, Tulsa, and Norman. Contact us today for a free estimate.