What is a deductible? Perhaps you’re a new driver, or just new to the world of insurance. You may be wondering what exactly a deductible is, or what it means for you specifically. Well, you’ve come to the right place. One of the things we try to do here at Effective Coverage is to make complicated insurance terms more easily accessible. So let’s start with one of the most commonly used, (but often misunderstood) insurance terms out there.
What is a Deductible?
An insurance deductible comes into play whenever you file a claim. The deductible is an amount you will have to pay out of pocket before your insurance policy will contribute any money towards the damages. Most insurance policies have a deductible associated with them. Generally speaking, the higher the deductible, the lower the monthly cost of your insurance.
For example, let’s say you got into a car accident, and your car was severely damaged. You would have to pay the full amount of your deductible before any insurance company would write you a check to repair the damages. Or rather, the way it happens is your insurance company will write you a check for the damages to your vehicle, minus the amount of your deductible.
So if your deductible is $500, and you got into a car accident, $500 will be subtracted from the cost of repairs in the check that the insurance company writes you. A common misconception people often have is that they actually have to pay the insurance company the cost of the deductible when filing a claim, but this is not how it works. The insurance company writes you a check for damages, (minus your deductible) not the other way around. Some people avoid even filing a claim because “they can’t afford to pay the insurance company $500” (or whatever the cost of the deductible is), but this is simply a mistaken belief.
When Do I Have to Pay my Deductible?
Your deductible is only something you have to pay when filing a claim, and not all types of claims require you pay a deductible. For example, if you are involved in a car accident, but you are not the “at-fault” party, you will not have to pay your deductible to have your car repaired. However, if you are determined to be 100% at fault, then you will have to pay your deductible in order to have your vehicle repaired. And in some cases, both drivers can potentially share fault for an accident. When this occurs, you will likely only have to pay a portion of your deductible, since you are only partially at fault.
How much you have to pay depends on what you agreed upon at the time you purchased your insurance. For more general information about car insurance, you might try these related articles:
- What You Should Know About Car Insurance
- Bundling Auto and Renters Insurance
- What Does Full Coverage Mean?
At Effective Coverage, we search through multiple carriers to guarantee you the lowest rate possible. Contact one of our talented car insurance professionals with any questions you may have at (800)892-4308 or click to get covered – whether you need auto insurance quotes online or coverage anywhere else!
And if you need renters insurance, Effective Coverage offers the nation’s only completely mobile platform to quote and purchase renters insurance right from your phone or tablet in just one minute. Get an online renters insurance quote today and protect your family.