Information about car insurance deductibles

Car insurance deductible explained

A car insurance deductible is the sum that will be paid out of pocket before insurance coverage comes in to cover the rest of the claim.

Comprehensive and collision insurance typically comes with deductibles and are optional coverage types. While not legally mandated for driving in any state, they may be necessary for those financing or leasing a vehicle. Liability insurance is a requirement for legal driving in most states and usually does not have a deductible.

Deductibles can be confusing for many regarding car insurance, leading to a frequent topic of questions. Car insurance deductibles are included in some coverages to limit the amount you pay in the event of a car accident. Here are 16 questions to help you understand car insurance deductibles.

1. What does a car insurance deductible refer to?

In a covered accident, a deductible is the upfront amount you must pay before insurance coverage kicks in. This deductible is then deducted from the total damages.

2. What is the functionality of car insurance deductibles?

Car insurance deductibles function by requiring policyholders to pay a predetermined amount out of pocket before their insurance coverage kicks in.

You must select a deductible amount when choosing Comprehensive or Collision coverage for your auto policy. In the event of a car accident, it is necessary to submit a claim to your auto insurance provider. Your insurer will then provide you or your lender (in case of a total loss) with a claims check, which will reduce the amount of your deductible.

If your car sustains $2K in damage from hitting a guardrail, with a $500 Collision deductible, you would be accountable for the $500 while your insurer covers the remaining $1,500 for repairs.

3. Is a deductible required for comprehensive and Collision coverage if my car is damaged?

Comprehensive coverage includes protection against fire, vandalism, and falling objects, while collision coverage protects against damages from accidents or collisions.

If your vehicle is damaged, only one coverage – Comprehensive or Collision – and its corresponding deductible will apply, depending on the cause of the damage.

When considering your car insurance policy, it’s essential to weigh the benefits of having Collision and Comprehensive coverage alongside state-required coverage.

4. Does deductible impacts car insurance?

Yes, by determining the amount a policyholder must pay out of pocket before coverage. When selecting a deductible amount for Comprehensive or Collision coverage, it is essential to consider factors such as driving history, personal finances, and the financing status of your vehicle.

The Insurance Information Institute states that increasing your deductible can lower monthly premiums. Raising your deductible from $200 to $500 could result in a 15 to 30 percent reduction in Collision and comprehensive coverage costs.

5. Who is responsible for covering the deductible?

The driver responsible for the accident is typically accountable for paying the deductible. Your car insurer may seek reimbursement from the at-fault driver’s insurer if deemed not at-fault.

6. Does my car insurance deductible cover glass damage?

When filing a claim for a damaged vehicle glass, Comprehensive coverage typically requires payment of a deductible. Some states offer “zero deductible” Comprehensive coverage for glass claims.

Adding “zero deductible” glass protection to your Comprehensive coverage will increase the cost of your coverage and your premium.

7. Car insurance coverages that require a deductible?

Comprehensive and Collision coverages are typical coverages that come with a deductible. Certain states may require deductibles for additional coverages such as Uninsured Motorist Property Damage or Personal Injury Protection (PIP).

8. What is the typical auto insurance deductible amount?

When individuals choose a deductible for their insurance coverage, they typically consider factors such as cost, potential liabilities in case of an accident, and lender requirements, often selecting a deductible of $500 or $1000.

9. Payments for an auto insurance deductible, when to pay?

Typically made when filing a claim. An auto insurance deductible is the amount you pay out of pocket when you have a covered accident. This deductible reduces the amount your insurer will pay to repair or replace your car. If your vehicle is being repaired, you would pay the deductible amount to the repair company. If your vehicle is totaled, the deductible is deducted from the amount your insurer will pay you to replace your car.

10. The difference between a high and low deductible?

Is the money you must pay out of pocket before your insurance coverage kicks in. Choosing higher car insurance deductibles can lead to reduced monthly premiums but may necessitate a higher out-of-pocket payment in case of an accident or claim.

Choosing a lower car insurance deductible results in a higher monthly premium, but you must pay less out of pocket if you need to file a claim.

11. Does my car lender specify deductible requirements?

When financing or leasing a vehicle, lenders typically mandate carrying Collision and Comprehensive coverages with a deductible not exceeding $500.

12. Can a car insurance deductible be waived?

If your car sustains damage in an accident where you are not deemed at fault, you may receive payment for your damages from the other driver’s insurance without having to pay your deductible.

13. Am I responsible for paying the car insurance deductible if I am not at fault?

If you are deemed not at fault, your insurance company will communicate with the other driver’s insurer to seek reimbursement for the damages, including your deductible. If successful, you will receive a refund for your car insurance deductible.

It is possible to seek payment from the at-fault driver’s insurance, regardless of whether you have Collision coverage. Additionally, in states that offer Uninsured Motorist Property Damage coverage, you may be able to recover from that coverage if the other driver is uninsured.

14. Is a deductible required for hitting a car?

If you hit another car, your Liability coverage will apply to the damages to the other vehicle. There is no deductible for Liability coverage. Any car damage would be covered under Collision coverage, and your deductible would apply.

15. What should I do if my car insurance deductible exceeds the cost of repairs?

In the event of minor damages to your insured vehicle, it is recommended to contact your insurer to clarify your deductible and explore available options. They can assist you with the claims process if the damage involves another vehicle or property.

16. What are the consequences of not paying my deductible?

The deductible is necessary for repairs on your vehicle. If the car is totaled, the deductible does affect the amount the insurance company will pay for the destroyed car’s value.

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