Car Insurance Deductibles: How to Make the Right Choice

Car Insurance

Getting a car insurance package can feel like a frightening task. The extensive form-filling process and the countless possibilities make you want to skip the insurance altogether. If you are a car owner, having your car covered with insurance is more than necessary. It’s easier to get a good car insurance quote once you know all factors to consider. Let’s walk you through what deductibles are in an insurance claim and how can you choose the right one:

What Is a Car Insurance Deductible?

Suppose you get in a car accident and the damage is $3,000. When you claim the loss, you’re told that your insurance company will only pay $2,000. This is where the deductibles come in. A car insurance deductible is an amount you’ll pay out of your pocket in case of an accident or wreckage before the insurance company takes charge of the bill. It is often confused with premium, the amount you pay to the company regularly in exchange for the insurance coverage.

How Does It Work?

When choosing the type of insurance coverage, you will see a bunch of options regarding the choice of deductibles. It varies from company to company and depends on which type of coverage you choose. For instance, a deductible amount is necessary if you select collision or comprehensive coverage. In the case of other coverage types, such as medical payments coverage, it depends on the state. The average car insurance deductible is $500.

How to Choose the Right Deductible?

After knowing and understanding how deductibles work, it is essential to see how you can choose the best one for yourself. Here are a few factors that help in making the right choice:

1. Comparison With Insurance Premium

Generally, the lower the deductible, the higher the insurance premium is. Depending on your ease, you can either choose a low or a high deductible package. Choosing a low deductible means you will have to pay a fair premium regularly, but in case of an accident, the company will compensate you more. A low deductible proves fruitful in the long run. Choose the high deductible package if, when needed urgently, you can easily pay that amount collectively. 

2. Mileage and Driving Risk

Before selecting the amount of deductible, calculate the total mileage and time you spend driving. Evaluate your driving skills, whether you’re a rash driver or a careful one. If your drive time is relatively high, then you’re more prone to getting into accidents. In that scenario, choosing a high deductible won’t be a good choice since you may have to pay it out of your pocket frequently due to an added risk factor for accidents.

3. Consultation With an Insurance Expert

If you don’t have the time or energy to do the research all by yourself, you can simply consult with any insurance expert. Most companies provide the facilities of expert advice. The most significant benefit of seeking professional consultation is that the expert will provide you with a detailed review of all the financial aspects and possible choices.

Endnote

Finding appropriate insurance coverage for your vehicle is hard, especially if you’re a first-timer. You must know all the components and requirements of a good insurance policy, deductibles included. To assure that you’re making the right choice for your vehicle, simply read through the fundamental aspects above, and you’ll be good to go.

The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The World Financial Review.