How Do Car Insurance Deductibles Work?
A car insurance deductible is an amount of money you pay out of pocket before the insurance company pays for the rest of your accident claim. After you make a claim and it gets approved, the deductible will be applied to your damages. It will be deducted from the damages, for instance, if the damages are $5,000 and your deductible is $500, then the insurance company will pay for the remaining $4,500.
You pay a deductible when the accident is your fault or the person at fault cannot be decided or does not matter. Sometimes, you still have to pay the deductible if the other driver’s insurance policy limits exceed the damages.
The damages could fall under two types of coverages, collision coverage and comprehensive coverage. Collison coverage falls under accidents with another vehicle or hitting stationary objects like a tree or telephone pole. It does not cover damages you made to another person’s property. Comprehensive coverage is for incidents other than car accidents. It’s if a tree limb damages your car, or if hail cracks your car’s windows, or any other instances, such as vandalism.
You can choose your own insurance deductible, according to Progressive, most car owners choose five hundred dollars. You can choose a higher deductible if you want a lower insurance premium or the amount you pay monthly or every six months, so you can get insurance coverage.
But if you cannot pay the deductible because it’s too high or you do not have the money, then you have a few options, according to Experian.com. You could push off filing your claim until you have the money to pay the deductible. You can negotiate with your mechanic to see if they will take off the deductible. The insurance company might be sending you a check for the repairs, so they might be willing to take off what you cannot afford. If you can afford the expense, then do not file a claim, such as if it’s a few dents or a taillight. You might not need to pay a deductible because there wouldn’t be one. If you have an emergency fund, withdraw some of it to pay for the damages or the deductible. The deductible may be too high, so you could take out a loan. You can put money towards it until it’s paid off. To prepare for an accident, try lowering your deductible, so you can pay it later. If the repair costs for the accident exceed the deductible, then your insurance pays nothing. For example, if the repairs cost $1,400 and your deductible is $1,500, then your insurance would pay nothing.
However, if you have liability insurance, which is required in most US states, you won’t have to pay a deductible as it covers damages made to another vehicle or their property.
In conclusion, if you find yourself in a car accident that’s your fault or the other driver’s fault, make a claim and wait to get approved. The deductible will then be taken off the damages and your insurance company will pay the rest. If you have liability insurance, you don’t have to pay the deductible as it covers damages to vehicles and a person’s property. Or if you cannot afford the deductible, you can push off filing the claim, pay the expense, or put out a loan to help pay for it.
Fitzpatrick, Mark. “Auto Insurance Deductibles: How Do They Work?” ValuePenguin, ValuePenguin, 22 Mar. 2021. www.valuepenguin.com/auto-insurance-deductible.
“How Do Car Insurance Deductibles Work?” Progressive, Progressive Casualty Insurance Company. www.progressive.com/answers/car-insurance-deductible/
Stolba, Stefan Lembo. “What Happens If You Can’t Pay Your Car Insurance Deductible?” Experian, Experian, 10 Aug. 2020.
“Understanding Car Insurance Deductibles.” 21st Century Insurance, 21st Century Insurance. www.21st.com/auto-insurance-information/understanding-car-insurance-deductibles.htm.
Waite, Anamarie. “What Is a Car Insurance Deductible & How Does It Work?” WalletHub, Evolution Finance, Inc., 18 Feb. 2021.