The definition of an insurance deductible changes with different insurance types. When it comes to purchasing your car insurance, one of the decisions you will need to make is the amount of your deductible. But what is a car insurance deductible?
It’s the amount of money you will have to pay toward repairs before your insurance covers the rest. For example, if you’re in an accident that causes $3,000 worth of damage to your car and your deductible is $500, you will only have to pay $500 toward the repair. The insurance company pays the remaining $2,500.
For many people, increasing the amount of their deductible is also a great way to save money. That’s because when you choose a higher car insurance deductible amount, it could lower the amount you pay on your insurance premium.
However, it’s important to choose a deductible that you can afford. Imagine not being able to get your car fixed because you don’t have money to cover the deductible.
When choosing your car insurance deductible, think about how much you can pay without causing a lot of stress in your life? Consider your income, your household budget, your personal savings, and your available credit.
Understanding how deductibles work and knowing what you can afford is important to getting the right coverage at the right price.