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Auto Insurance Deductibles

Auto insurance policies, like other types of insurance, offer the consumer the opportunity to select their deductible amount based on personal preferences. A deductible is an amount of money that will be deducted or subtracted from any auto insurance claim before the insurance provider pays the claim.

After you are in an auto accident, for example, you will file a claim with the insurer to help pay for repairs to your vehicle. If the damage will cost $1,900 to repair, then you would normally expect to get $1,900 from your auto insurance claim. But if you have a deductible of $1,000 then you are responsible for paying that amount. The auto insurance company will deduct that money first. Then they will send you a check for the remaining balance, which will subsequently only total $900.

The question most people always ask is “Why in the world would someone agree to accept a deductible on their auto insurance policy and get less money if there is an accident?” It’s a wise thing to ask, but there is a perfectly reasonable explanation. Auto insurance companies offer significant discounts based on how high your policy deductible happens to be. So if you want to lower the cost of your auto insurance then one of the easiest ways to do so is to accept a higher deductible. Of course if you can afford it then the best coverage comes from paying extra to get an auto insurance policy with a zero deductible. Choose a deductible amount that fits your budget and needs and then you’ll get the right balance between cost and coverage.