When you need auto insurance, you may have some options with the policy you choose. The options you typically have include the types of coverage you want for the car, the levels of coverage, and the deductible amount for the policy. If you are new to purchasing insurance, you may wonder what the deductible is and how to choose the right amount, and here are some tips to help you with this.
What the Deductible Is
Almost every type of insurance policy has a deductible, and you can often choose this amount when you purchase a policy. The deductible amount is simply the dollar amount you must pay when you file a claim. After you pay it, the insurance company will pay the rest of the costs of the claim.
For example, if you have a $500 deductible and get in an accident, you would pay the first $500 for repairs, and the insurance company would pay the rest. If the total repair bill was $4,000, the insurance company would pay $3,500 of it, while you would only pay $500.
Tips for Choosing the Right Amount
As you think about what amount you would like to choose as the deductible, it's important to know that the policy will cost more if you choose a low deductible. As you increase the deductible amount, the policy costs will decrease. Therefore, if your number one goal is to have a cheap policy, you should choose a higher deductible, such as $1,000 or $2,000.
The second thing to think about before choosing your deductible is your own ability to come up with this money if needed. You never know when you might cause an accident to happen, as car accidents happen all the time. Because of this, you might suddenly find yourself in a situation where you need to file a claim. When this happens, how much money could you comfortably come up with?
Many people find that coming up with $1,000 is hard to do, and that is why a lot of people stick with choosing a lower deductible, such as $500, even if it costs more to have.
Now that you have a better idea as to what a deductible is and how to choose the right amount for your auto insurance policy, you can contact an auto insurance company to talk to an agent about getting a policy started for your vehicle.
