What Does Deductible Mean in Car Insurance? – The question of “what does deductible mean in car insurance?” must be very familiar for you, especially if you are now in the process of looking for affordable and reliable car insurance. Yes, the term “deductible” appears a lot of times in the process of finding car insurance.
Every car or auto insurance company include that term in their offers. However, many customers do not understand what it meant. If you are confused as well about what does deductible mean in car insurance, you will find the answer below.
The explanation that you are about to read down below helps you to get the mean of car insurance deductibles—from so that in the end you understand how they work and prevent you from choosing the wrong car insurance.
1. What is a Deductible in Car/Auto Insurance?
Let us begin by understanding the definition of deductible. Basically, in the world of insurance, any types of insurance, the definition of deductible is the particular amount of money that you agree to pay in advanced when you want to claim the insurance. It means that the deductible payment is like the out-of-pocket money you pay to the insurance company before the insurance company eventually pays for the claim for your car, whether it is the result of a loss or damage.
It is very common so that you do not have to get mad or upset when the insurance company informs you that you will have to pay some money first before the claimed can be processed. Here is an example, say your deductible is $300. Your car gets damaged and it has to be repaired. Repairing the car costs $800. It means that you will have to pay $300 first and then the insurance company is responsible to pay the remaining $500.
It may seems a little bit expensive at first. However, think about this way: what if your car is lost. The deductible is usually the same for any case. It means that if your deductible is $300, it remains that way regardless what happened to your car, lost or damaged. If the car is lost and your car worth $2,000, you will have to pay (only) the first $300. The remaining $1,700 is the responsibility of the car insurance company.
2. Choosing the Right Car Insurance Deductible
Choosing car insurance means considering a lot of factors, including the deductible of course. Deductible payment cannot be avoided. It is just there in every car insurance program offered to you. One thing that you have to keep in mind is that the higher the deductible, the lower the monthly premium.
It is your choice. If you want cheap insurance, you cannot be surprised if the deductible is high. On the contrary, if you pay quite an amount of money for the insurance every month, the deductible payment will be relatively low. Also, remember that the average deductible payment ranges between $250 and $1,000 per accident/claim. You should not be paying higher that that or lower than that, knowing what does deductible mean in car insurance.