June 17, 2009

Auto Insurance Deductible

Auto insurance deductibles are defined as what the insured party pays in the event a claim for damages needs to be filed and only applies to full coverage auto insurance policies. Auto insurance policies for liability only do not have deductibles. The amount you choose for the deductible affects the total price of the premium. A good example is when comprehensive and collision automobile insurance policies have a preset amount that is paid if a claim is filed. If the insured vehicle sustains damage for an amount of say $5,000 and the auto insurance policy has a deductible of $1,000 the insurance company will pay $4,000 and the insured has to pay for the balance of the repairs. It is best to get several auto insurance quotes with various deductibles to determine the best choice.

In order to make the best decision possible for your deductible, the amount of coverage first needs to be determined. If the vehicle is older, choosing a full coverage auto insurance policy may not be the best choice since state requirements may be enough. Choosing full coverage on an older vehicle may actually be more coverage than the vehicle is actually worth.

If the vehicle is a luxury vehicle, sports car or any type of high end vehicle then choosing a full coverage (comprehensive and collision) auto insurance policy is definitely the way to go. If the vehicle is financed through a financial institution, the financial institution will require the vehicle to have a full coverage auto insurance policy. Repairing a vehicle can be expensive so paying the smaller amount for the cost of repairs saves the insured money in the end.

The main thing to consider when choosing a deductible is to determine exactly what is affordable if the insured has to pay for damages to their vehicle. If paying $1,000 to repair damages is not affordable then an auto insurance policy with a lower deductible should be chosen.

However, choosing a higher deductible means less out of pocket expenses for the insured and a lower premium. Always get several auto insurance quotes in various amounts to determine monthly savings versus paying a higher auto insurance deductible.

There needs to be a lot of thought involved in choosing the right auto insurance. Choosing cheap auto insurance with a high deductible may cause financial stress to pay the premium. If the insured has to wait to pay for damages to the vehicle that delays getting the vehicle repaired. If the vehicle is used to drive to work every day and cannot be driven due to damages, the insured again cannot pay for repairs since they are unable to work due to lack of transportation.