There are plenty of pros and cons to auto coverage costs. Here’s what you should know about deductibles.
When you buy insurance, your policy will include a deductible. This is the amount that you agree to pay on a bill before the insurer pays the benefits. In the event of a claim, this is an immediate out-of-pocket expense. Health, dental, home and auto insurance all have deductibles. Before you sign yourself up for a low or high one, here’s what you need to know about deductibles.
If you get into an auto accident, you would need to pay the deductible for any needed repairs before the insurer pays the balance, up to the policy limits. In general, high deductibles can lead to lower premiums, but also higher out-of-pocket costs.
The best benefit of having high deductibles is that you pay lower premiums than you would with a lower deductible. The insurer has less risk with a high-deductible policy because the benefit payout on a claim is reduced. With a higher deductible, you also avoid wasting money for benefits that you would not likely use. For example, young, healthy adults who don’t need as much health care often choose a high deductible. By eating right and exercising to stay fit, these young adults protect themselves against health issues and the need for extensive health coverage.
High Out-of-Pocket Risks
The most significant downside of a high-deductible plan is that there is a significant out-of-pocket expense in the event of a claim. For example, on a $1,000 deductible auto policy, you will be required to pay $1,000 towards the expenses before your insurance kicks in. This is a sizable outlay of money compared to a $250 deductible.
Talk to Your Insurer
Your insurer will be able to advise you on the right policy and deductible for your needs. Depending on your financial situation, you may need more coverage or a lower deductible. Are you ready to get started? Discuss your options by visiting the team at Humble & Davenport Insurance, serving Renton and neighboring cities in Washington.