According to 21st, “If you are in an accident that caused $4,000 in damages to your car, and you have a $500 deductible, you only have to pay $500 out-of-pocket for repairs. The remaining $3,500 will be paid by your insurance company.”
Your Deductible is a Decision You Need To Make, But What is it?
In the event of an accident, your car may be covered by your insurance. However, your insurance will only pay towards the repairs if you pay your deductible. As an example: If you suffer an accident with a total damage worth of $2,500, and your deductible is only $600 dollars, you will have to pay the deductible while your insurance covers the other $1,900.
In many instances, it actually saves money to have a higher deductible. This happens because choosing a higher deductible can lower what you pay on the insurance premium.
That being said, you should make sure the deductible you choose is affordable to you. It would be a tragedy to owe more on the deductible than you can pay, leaving you unable to fix your car.
Some things to consider when you choose the deductible for your car insurance:
- How much can you afford without financially stressing yourself
- Your home income
- Household Budget
- Available Credit
Knowing how deductibles work, and understanding your own budget and financial position is vital in making sure your coverage is the best you can get.
Make sure you study your options for car insurance, consider your coverage goals and your lifestyle. Your car insurance deductible is important, and it is something that you must think long and hard on. If you want the right coverage, with a low premium, a higher deductible is ideal. Always settle for an affordable deductible.