Understanding Your Auto Insurance
Auto insurance can seem like a confusing and overwhelming topic, especially because we are dealing with a lot of jargon that you don't know how to properly interpret. Learn some basic auto insurance terms so that when you're ready to shop for your new policy, you'll be able to talk the talk with confidence.
Understanding Your Auto Insurance
You have probably never had a conversation about auto insurance without talking about something called "deductible.” This is one of those confusing auto insurance terms that you have no idea what it really means. In this article, we'll explain what deductible is and how you can use it to get the best policy for your needs.
The Bottom Line
The deductible is a dollar amount that you pay before an insurance company agrees to pay any of the costs after a car accident. For example, if you have a $1,000 deductible and your car sustains $2,000 in damage after an accident, then you will pay $1,000 from your own pocket and the auto insurance company will cover the remaining $1,000 should you decide to make an insurance claim.
This deductible amount stays the same for each and every claim within a twelve month period. This is to keep people from reporting minor accidents for the sole purpose of getting an insurance company to cover a lot of damage in one year, followed by no claims in the next year.
What Is The Most Common Deductible Amount?
The most common deductible amounts are usually between $500 and $1,000. Deductibles of $500 and less are pretty rare these days but it depends entirely on what you can afford. A higher deductible will result in a lower monthly premium while a lower deductible will increase your premium but could save you money if you make an insurance claim every now and then.
How Much Does The Deductible Cost?
As you can probably understand, the deductible is an extremely important consideration when it comes to your auto insurance. A lower deductible may mean a higher monthly premium, while a higher deductible may lower your premium but could still result in paying for damages that exceed the deductible amount.
The best way to find out how much a deductible will cost you is to look at all of your potential insurance companies and compare their quotes. Some companies will allow you to make multiple claims in one year and pay no more than your regular rate for the remaining months, so be sure to ask about that.
What Is The Purpose Of A Deductible?
The main purpose of a deductible is to protect the insurance company against paying out all of the damages after an accident. This is especially important when you have higher deductibles because it will result in more damage to your car and a smaller deductible from your own pocket. However, if you make too many claims in one year then you could end up paying a higher premium for the rest of the year. This is why it's important to find out how many months you can make claims and what your regular rate will be for those months before buying a policy.
How Do I Know Which Deductible Is Right For Me?
When it comes to selecting a deductible, the best way is to look at your budget and decide how much you can afford to pay in the case of a claim. If you have an older car that is not worth a lot of money then it may make sense for you to have a lower deductible. On the other hand, if your car is new or more expensive then you may want to go with higher deductibles so that you won't have to pay out of pocket for damages beyond your limit.
If you can afford a higher deductible then go for it but if you can't then don't go over the amount of money that you can pay out of pocket.
You might be wondering why it's necessary to have a certain deductible amount when you don't even know how much your car will cost in damages after an accident. This is because insurance companies use pre-loss cost estimates to figure out how much they will need to pay out in case of a claim. If your insurance company knows that your car is not worth $10,000 then they won't need to put up as much of a fight if you decide to make a claim for the total value.
This is why it's very important to get an accurate estimation of the costs after your car is repaired so that you can make sure that the insurance company will pay out enough to cover those costs. If you choose a high deductible then you're protecting yourself from paying out all of your own money but if you choose a low deductible then you're putting more money in your pocket but also making it easier for insurance companies to deny your claim.
How To Get The Best Deal On Your Auto Insurance
Despite the complexity of the topic, finding the best deal on auto insurance can be a pretty straightforward process if you prepare in advance. To get started, take some time to understand what auto insurance covers and how you can get better value by making smart decisions. We've compiled this quick and simple guide to help you make better-informed decisions when choosing your insurance policy.
Knowledge Is Power
The first step on your journey to selecting a great policy is understanding the basics of any auto insurance policy. This means knowing what is and what isn't covered by your insurance according to state regulations. These laws may vary from state to state and from one insurance company to another, so you will need to understand how your policy works to get the best value for your money.
Getting good quotes from various insurance companies is a smart move because it will help you find out the best fit for your budget. It's important to shop around for insurance because different companies offer different perks and offers that might save you a lot of money if you take advantage of them. Don't assume that because one company is offering a cheap rate that it can't be beat by other companies in the same field.
Conclusion
When you want to get the best auto insurance quote possible, getting multiple quotes from many different insurance companies is the best way to do it. Taking advantage of your right to comparison shop and comparing all offers side by side can give you a clear picture of what can actually be achieved in regards to lowering your premium or saving money in general. You'll soon find that finding an affordable policy is not as hard as it sounds and with a little bit of research, you'll be better armed to get the best rate possible.