Philipsburg, PA – Ever wonder, what is a deductible? How does your deductible affect your premium? Do you always have to pay your deductible after an accident?
We talked with Jennifer Folmar, Hrenko Insurance Agency, Inc. to answer these common insurance questions.
“A deductible is the amount of money you will have to pay toward fixing or repairing your car before your insurance kicks in,” says Folmar. “Deductibles typically only apply to collision and comprehensive coverage.”
If a person is deemed at fault for an accident, they typically pay the deductible under their own policy. If another person damages your vehicle and are deemed at fault, their insurance would typically pay for your damage in its entirety. In that case, you wouldn’t be responsible for paying your deductible. Most people choose a deductible between $100 and $1,000, although they can be as low as $0 or as high as $10,000, depending on the coverage and state laws.
Folmar says when choosing a deductible there are a few things to keep in mind:
- Your budget: Ask yourself: What’s the amount of money I would be comfortable paying if I need to repair my vehicle? The lower your deductible, the less you will have to pay out of pocket if you must file a claim, but your overall car insurance premium will be higher.
- It works the opposite way, as well. If you have a high deductible, you will have a lower car insurance premium – but you’ll pay more out of pocket if you file a claim. This decision comes down to personal preference and budget. It’s also smart to have the deductible amount available in an emergency fund.
- Drive time: If you’re in your car a lot – or driving in more accident-prone areas – you might be exposed to more risk than someone who drives less.
- Value of your vehicle: The more expensive the vehicle, the more it costs to insure. In that scenario, a high deductible could help you save on your premium. However, if you have a car loan, some lenders stipulate that your deductible should not exceed a certain amount.
“When talking to customer I explain how changing their deductible can affect their annual premium – or show different options over multiple years,” says Folmar. “I want customers to understand their choices and feel confident with their decision.”
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