You pay your deductible only when you file a claim and it’s approved. Your insurer subtracts your deductible amount from your claim’s payout amount.
For example, your claim is approved for $2,500 and your deductible is $500. Your insurer writes you a check for $2,000. You're then responsible for paying the remaining $500 out-of-pocket.
Your car insurance deductible is the set amount of money you have to pay towards car insurance repairs. The remaining balance is paid by your insurance company.
For example, you’re in an accident that causes $6,000 worth of damage to your car and your deductible is $500. You pay $500 and your insurance pays $5,500 towards the repairs.
Now that we understand what deductibles are, let’s go over some more basics.
There are two common insurance types that use deductibles:
There are two other types of insurance that use deductibles:
Always pick a deductible amount that you would feel comfortable paying out-of-pocket. Outside of this, be sure to consider the value of your vehicle. A car that is only worth $1,000 probably isn’t worth getting an $800 deductible for.
Deductibles usually range from anywhere from $200- $2,000. The most common deductible amount is $500. Keep the below ratio in mind when choosing your deductible amount:
After an accident, you submit a claim to your insurance company for the cost of damages. Once your claim is approved, your insurance company issues a payout. Your insurer then subtracts your deductible amount from your claim’s payout amount.
Let’s say your claim is approved for $2,500 and your deductible is $500. Your insurer writes you a check for $2,000. Therefore, you don’t have to worry about sending your insurer a check.
Just make sure that you can cover your deductible out-of-pocket. Some insurers may ask you to pay your deductible first.
You don’t need to worry about paying a deductible in the following situations:
Make sure you pick the best car insurance deductible for your needs. Don’t forget to consider your out-of-pocket capabilities, your vehicle’s worth, and the type of coverage.