The world of auto insurance can get confusing. It’s important that you understand some of the ins and outs of insurance so that you can make well-informed decisions about your insurance. Auto insurance isn’t optional, so it pays to understand how this system works. Let’s take a look at auto insurance deductibles and learn more about this crucial aspect of insurance.

What Is a Deductible?

A car insurance deductible is the amount that you would pay out-of-pocket when you make a claim on your insurance. You must pay this amount before the insurance company starts paying for repairs. Most types of auto insurance have a deductible. This includes collision, comprehensive, uninsured motorist, and personal injury protection. You will usually have a choice between a high and a low deductible, however. Generally, a high deductible would mean a lower insurance rate, while a low deductible means a higher insurance rate. According to Forbes, drivers who raise their deductible can save between 7% and 28% on their monthly insurance rates.

How Do Deductibles Work?

It’s vital that you understand how deductibles work so that you can make smart insurance choices. A car insurance deductible must only be paid if you file a claim, but you must pay that deductible every time you file a claim. Once you pay the deductible amount, the insurance company will pay for the rest of the cost to repair or replace the vehicle. For example, if you have a deductible of $500 and there is $3000 worth of damage, you will pay $500 and the insurance company will pay $2500.

What Types of Coverage Have Deductibles?

The most common type of coverage to include deductibles would be comprehensive and collision. There can be deductibles for personal injury protection, uninsured motorists, or underinsured motorists. You need to review the details of your particular policy and make sure you’re comfortable with the deductible policies and amounts.

How Do I Choose a Deductible?

If you’re unsure of how to choose the right deductible, then you’ll want to sit down with an auto insurance representative. They’ll be able to explain what would be best for your situation. In general, though, if you need a lower monthly rate, you might need to choose a higher deductible. If you’re more concerned with out-of-pocket expenses should you file a claim, then you’ll want to go with a lower deductible with a higher monthly rate.

These are just a few things you need to know about auto insurance deductibles. If you have any further questions about insurance, contact Ramsey Family Insurance today. If you’re looking for auto coverage, give our office a call!