Car Insurance Deductible
While car insurance is mandatory with every state maintaining its own minimum car insurance requirements, the coverage that is not required by law is often the most expensive. Collision and comprehensive car insurance are coverage which pay or reimburse for damage to the car owned by the policyholder. Both optional insurance coverages have car insurance deductibles and the amount of the deductible has a big impact on the affordability of your car insurance rates. Before buying the best car insurance for your needs, get multiple car insurance quotes and compare the auto insurance deductible on each policy to see what is most affordable and cheapest for the coverage you need.
What Is A Deductible?
Many types of insurance have a deductible. A deductible is the amount of money which the insured person must pay on a claim before the car insurance company begins to payout or cover additional damages, repairs, expenses or bills beyond the deductible.
If an insured car suffers $2000 worth of damage in a covered accident and the insured has a $500 deductible, the car insurance company will pay $1500 to fix the car and the insured must pay $500. The deductible applies each time a claim is made for damage or repairs to the car under the policy.
What Does Collision Insurance Coverage?
Collision coverage insures against damage to a vehicle caused in an accident like a collision with another car or a stationary object like a tree. Although collision car insurance is not mandatory under state minimum car insurance laws, it is usually required by banks or lenders that loaned an insured individual the money to buy a new car. The deductible on collision coverage is usually between $250 and $1500, but the most common deductible is $500.
Just a note to consumers looking for affordable car insurance, a higher deductible will result in cheaper car insurance rates as auto insurance companies will not worry about paying out on every small car accident, collision, or damage.
What Is Comprehensive Car Insurance?
Comprehensive insurance covers damage to an insured vehicle caused by theft, vandalism, acts of nature and collisions with animals. Like collision coverage, comprehensive coverage is usually required by lenders who have a financial interest in a vehicle. The deductible options on comprehensive coverage are the same as those for collision coverage and the average deductible is $500. In the case of theft, many comprehensive policies cover a rental car for up to 30 days.
Affect of Deductible on Car Insurance Rates
Since lower deductibles mean the car insurance company faces more risk of claims, payouts and reimbursements, the premiums for low deductible collision and comprehensive insurance coverage are higher. However, higher car insurance deductibles are priced with cheaper monthly premiums.
The catch is that the policyholder must have enough money to cover the amount of the deductible should the car be damaged. While a $1500 deductible gets you cheaper car insurance, many policyholders would not be able to pay $1500 out of pocket for repairs if their car was damaged or involved in an accident.
A Deductible Savings Account
The safest way to choose a high deductible is to put enough money in a savings account to cover the deductible if the car is damaged. The policyholder enjoys lower monthly premiums and collects interest on the money in the bank. The bank account means the insured will have the money to cover repairs if his or her car is damaged. For those who cannot afford to bank the full amount of the deductible, opening a savings account and making regular deposits helps reduce their risk.
Car Insurance Quotes
Everyone wants to save money on their car insurance, but before raising your deductible to save money with a cheaper policy, consumers should compare auto insurance companies to find the lowest rates on a policy with the deductible they need.
By entering your 5-digit zip code, MyCarInsuranceRates.com offers consumers multiple free car insurance quotes online to compare the best auto insurance companies in the country, like Nationwide, Allstate, GEICO, Progressive, 21st Century Insurance, Liberty Mutual, State Farm, Farmers, AAA, and AARP. We help our users find the best, cheap auto insurance available in the market.
Enter your zip code to begin a car insurance quote now, and find affordable coverage with the best car insurance deductible and rates.
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