What is a deductible? A deductible is the amount you pay before your insurance carrier pays any claim. Insurance companies offer deductibles on certain coverage in insurance policies as a method of sharing risk with the people they insure. Insurers believe that if you, the insured, share some of the risk you will likely be more careful and try to minimize the possibility of a claim. Since you, the insured, pay your share before the company is liable for their share, smaller potential claims are often avoided. What is the right deductible to carry?

In other words, select a deductible based on your tolerance for risk. Your agent should be able to help you choose a deductible that is right for you. Often, the decision is an easy one as insurers may only offer a few choices in deductible for a specific coverage. Typically, which type of coverage offers a deductible? The most common type of coverage with a deductible is physical damage (also known as comprehensive and collision). This is coverage for your vehicle itself. For damage caused whether or not at fault.

This coverage is usually required in the event any damage occurs while you are still paying for the vehicle. Typical physical damage deductibles are $250, $500, and $1000. Higher deductibles will reduce the cost of your insurance by lowering your premiums. When evaluating higher deductibles, it is a good idea to consider carefully your circumstances. Ask your insurance provider for quotes for various deductibles, and analyze them carefully before making a decision. The higher the deductible is on a specific coverage, the lower the premium for that coverage.

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