One of the decisions you will have to make when purchasing car insurance is how much you would like the deductible to be. If you are not familiar with insurance products and deductibles, you will need to understand what this means before you make a decision. Once you understand what this means, you will find that having a higher deductible will result in paying a lower premium on your car insurance.
What is a deductible?
A deductible is something you will find with almost any type of insurance policy, and you will always have one with a car insurance policy. The deductible is an amount you decide on when you purchase your policy, and it refers to the amount of money you must pay after you file a claim for damages that you were responsible for. This amount could be $250 to $2,000, or anything in between.
How does a deductible work if you file a claim?
Understanding how a deductible works is vital before you choose what yours will be, and here is an example to help you understand. If you caused an accident that left your car with $4,000 of damage, you would have to pay your deductible before the insurance company would pay the repair bill. If your deductible was $1,000, you would have to pay that first, and then the insurance company would pay the remaining balance of $3,000.
If your deductible was only $250, then you would only have to pay the $250. If your deductible was $2,000, you would have to pay that amount. The deductible you have will only affect you if you cause an accident and need to file a claim for the damages.
Why is a higher deductible cheaper to purchase?
Choosing a higher deductible is not a good thing when you file a claim and have to pay it, but choosing a higher deductible is a good thing when it comes to the amount you will pay for your premiums. Higher deductibles always result in lower premiums, and this is because the insurance company will view you as a lower-risk policyholder when you have a higher deductible. In other words, the insurance company is not as likely to have to pay a claim for you if you have a high deductible.
Having a higher deductible will always result in paying less for your car insurance, but this is not the only way to save money on car insurance. You can talk to a car insurance agency, like Scovotti Insurance, to learn about other types of discounts and ways you might be able to save money on your policy.Share
29 May 2018
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