What is Deductible
A deductible is simply the amount that the insured person has to pay before the insurance company will pay out for the repair or replacement of a vehicle. Auto insurance policies typically have two separate deductibles, one for comprehensive Losses and one for collision Losses. The collision deductible will come into play when the vehicle hits or is hit by another vehicle or object. The comprehensive deductible will come into play for just about any other peril that causes damage to the vehicle. This can include things like fire, flood, theft, and falling objects. Each auto policy will have a specified dollar amount to be paid out in the event of a claim of either category so the insured always knows exactly how much they will need to pay out of pocket.
How will Deductibles Affect My Premium?
This is where the trade-offs come in. Since the deductible is the amount the insured has to pay out, people typically prefer to have the lowest deductible possible but this comes at a cost. For the insurance company, giving the client the ability to have their vehicle repaired with less out-of-pocket cost can result in more frequent claims and more money paid out for repairs. For this reason, premiums and deductibles are inversely related. As deductibles decrease, premiums increase. It is always a good idea to have an agent check the price for multiple deductible options to be sure that you are selecting the best deductible for your situation. Some people are comfortable having a higher deductible because they typically have the cash to pay it if there is ever a claim and they prefer to have a lower monthly premium. Some people do not have the cash on hand to pay a big deductible, so it makes more sense to keep a lower deductible and just pay a little more on their premium to keep from ending up in a nightmare situation where they are unable to pay their deductible.
What Deductibles are Most Common
Comprehensive and Collision deductibles can range from as high as $5,000 to as low as $0, but those are extreme options that are not incredibly common. Most people will have deductibles between $250 and $1,000.
The most common split between collision and comprehensive is $500 for each. This makes for a safe deductible choice that is not too high to afford, and not too low to make the premium unbearable. Another option that is commonly seen is a collision deductible set at $1,000 with a comprehensive deductible of $250. The collision deductible will typically impact the premium more than the comprehensive deductible, so having this one set to $1,000 usually makes up for the difference in premium that comes from lowering the comprehensive deductible to $250. Any choice in this common range can be a possible best option
Glass is an important component of every vehicle that is on the road, and occasionally, a high-speed rock on the highway or a thief looking to steal personal belongings can come along and break the glass on your car. When these things happen, the owner of the vehicle will typically have to pay their comprehensive deductible or pay to replace the window or windshield out of pocket. Some states have adopted a very interesting solution for this inconvenience. If you are in a state that offers the option to have a $0 or $50 deductible for glass, you can opt into keeping your standard comprehensive deductible of $500 or $1000 and paying a few extra dollars to keep a minuscule, or nonexistent, deductible for glass!
So which deductible is the right choice? Well, there is no one-size-fits-all answer for this. At the end of the day, the decision is up to you. There are two main factors to keep in mind while weighing the differences between the different deductible combinations: do you have the means and willingness to pay a large sum of money if your car needs to be replaced or repaired, and would you rather play it safe and pay more in premium each month to ensure a more mild payout in the same scenario. The best way to find the sweet spot is to speak with your insurance agent about the answers to these two questions to see what options they recommend. Be sure to ask them if you are eligible to add an alternate deductible for glass!
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What is Deductible