Your deductible is basically the amount that you agree to pay out of your own pocket in the event that you file a claim through your auto insurance company.
The amount of your deductible is only paid out in the event that you file a claim for property damage under your auto insurance policy.
How Your Deductible Works With Your Auto Insurance Policy
For your auto insurance policy, you may have coverage for property damage, such as collision insurance. Collision coverage includes claims that are not covered through a basic auto liability coverage, which is required under most state laws.
If your auto insurance company requires a deductible for certain optional coverages, there may be a minimum amount of a deductible that you are required to agree to.
With some coverages and insurance companies, you may have the option to raise the deductible level above the minimum levels that are standard for the company.
Whatever the amount of a deductible you decide on, you can find the relevant information for your auto insurance policy on the declarations page.
Deductibles are generally applicable to collision or comprehensive insurance policies. If you make a claim under your collision or comprehensive coverage, you may have to pay out a deductible before the insurance company pays out any additional money for your claim.
In general, if you maintain a higher deductible for your auto insurance coverage, you will be able to get a lower premium for your insurance policy.
If you think you will be able to pay a higher amount out of your own pocket in the event that you have to file a claim, it is worth considering a higher deductible for your insurance policy.
When it is time to renew your policy or if you are shopping around for different quotes from auto insurance companies, it is worth asking how much lower of a rate you can get for a higher deductible.
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Considering Whether to Make a Claim Under Your Auto Insurance Policy
The amount of your deductible and the damage to your car will help you decide whether it is worth it to actually file a claim for physical damage under your auto insurance policy.
If you have a very high deductible and the estimate for repair costs for the damage to your car is relatively low, you may be better off deciding to pay the entire cost of the repair out of your own pocket rather than filing a claim through your insurance policy.
This is partly because if the cost of the repair for your car is higher than your deductible, then you will not receive any money at all from the insurance company as a result of your claim.
In addition, some drivers are cautious about filing a claim with their auto insurance company because they are afraid that their auto insurance rates will increase if they file a claim.
While this may be true, if you have excessive damage to your vehicle, it may be necessary to file a claim to have the repair work completed so that you are not driving an unsafe car and are able to maintain the car in a satisfactory condition for resale or trade-in down the line.
When you are shopping around for auto insurance companies, remember that your level of deductible and the cost of your premium is only some of the factors that you should consider to select the auto insurance policy that is right for you.
You should also pay attention to the track record of the particular auto insurance company you are considering to make sure that they actually have a reputation for paying out claims in an efficient manner for damage above the amount of your deductible.
They should also have a decent reputation for customer service in your area.
Besides asking around among friends and family about the reputation of their current auto insurance companies, you can also check your state department of insurance to make sure the company you are considering is in good standing and does not have many customer complaints filed against it.
It is important to know that you can rely on your auto insurance company to pay out a fair amount in the event that you have to file a claim under your policy.
Exploring Your Options
Your auto insurance deductible is the amount that you and your auto insurance company agree that you will pay in the event that you decide to file a claim under your auto insurance policy.
You may have the option to select a higher deductible for your policy, which means that you may pay a lower premium rate.
When deciding whether to file a claim under your auto insurance policy, you should take into account the amount of your deductible relative to the total amount of your claim.
Your ability to pay a higher amount out of your own pocket in dealing with an auto accident determines the level of deductible that you should select for your auto insurance policy.