Fri, 16 Sep 2022 14:23:31 -0600WeeblyFri, 31 Jan 2020 20:43:41 GMThttp://jimmymackcustoms.com/fyi/insurance-101-deductiblesInsurance is a payment that many of us make each month and hope we never have to use.  Insurance can be complicated and cumbersome.  There are so many pages given to us when we receive a policy, and many times, those pages go unread.  The next few posts will go over a few very important items that you really should take time to understand when reviewing your auto insurance products. 

Today, our post will try to help you decipher deductibles as pertaining to your insurance policy.  A deductible is the amount you pay out-of-pocket when you file a claim.  Consider it a cost-sharing partnership between you and the insurance company.  Both parties have a stake in any claims that are made.  If you didn't have to pay a deductible, you could technically have as many claims as you wanted, all at the expense of the insurance company. 

Deductibles in vehicle insurance differ from deductibles applied in medical insurance.  In many medical insurance policies, you have to meet a deductible every year before your insurance kicks in to cover the major expenses.  Once you have met that single deductible, your insurance may take care of everything else. Unlike medical insurance, there are no annual deductibles to meet with an automobile insurance policy:  you as the insured are responsible to pay the deductible for every claim you file. 

For example, let's say on January 16 you had an accident.  Your deductible is $1,000.  The damage to your vehicle is $4,800.  You are responsible for the first $1,000, and your insurance will pay the remaining $3,800.  

Later that same year, in August, you unfortunately have another accident.  Your deductible is still the $1,000.  This time, the damage to your vehicle is $850.  You will be responsible for the entire repair bill.  Your insurance will only kick in after the first $1,000 is paid.

The deductible is not extra money that the repair shop charges.  It is the first portion of the repair bill.  

How do you choose the right deductible for you?  This can be a tricky question.  There are many factors to think about when thinking of changing your deductible.   Consider the following:

• How cautious are you?  Are you willing to pay / will you have $900 for bumper repairs because you parallel-parked a little too close?
• What are you driving? If your vehicle is standard-built and a couple of years old, replacement parts should be easy to order.  With that being said, it is not uncommon for a mirror or headlamp on a 2015 and newer vehicle to cost over $1,500.  Luxury vehicles are even more spendy. 
• How often do you have accidents?  
• Accidents can be stressful enough without having to worry about coming up with a large deductible in order to have your repairs completed.  

Generally speaking, the higher the deductible, the lower the insurance premium will be, but you will have more out-of-pocket expense.  The lower the deductible, the insurance premium will usually be more, but you will have less out-of-pocket to pay when you have an accident.  Deductibles can range from $0 per incident up to $2,500 per incident.  Many times, the deductible will be dictated by the lender or finance company (if the vehicle is financed or leased).


Auto insurance policies usually have two types of coverage:  comprehensive and collision.  Comprehensive coverage protects you from unexpected incidents, like hail, wind, theft, fire, flood, hitting an animal or vandalism.  Comprehensive also covers windshield replacement and rock chips.  Collision coverage protects you if your vehicle hits another vehicle or rolls over.  There are separate deductibles for comprehensive and collision claims.  Most of the time, you can select a different deductible amount for each portion.  You might have an impeccable driving record and select a high deductible for collision, yet live in a state that is prone to hail storms so choose a low comprehensive deductible.   

​Take a moment to review your current policy.  Accidents are stressful enough without adding in an unexpected additional cost you weren't fully aware of.

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