When you are looking for car insurance coverage, one thing you need to consider is the amount of your deductible. All insurance policies include this provision, and the deductible is the amount that the insured driver has agreed to pay toward settling a claim made against the policy.
When a claim is made against a car insurance policy, the insurer doesn’t just write a check for the full amount being claimed. The policyholder is expected to pay something toward the cost of the damages, whether they are for the cost of repairs to the vehicle or the insurer is paying for the cost of medical expenses, lost wages and expenses incurred by people injured in the accident.
The amount of the deductible on the car insurance policy is important. Not only does the policyholder need to make sure that he or she can pay this amount after an accident occurs, but the amount of the deductible affects insurance rates. Choosing a higher deductible (and agreeing to pay more toward the cost of a claim against the policy) means lower premium rates.
A car insurance buyer should consider the amount of savings that he or she would get by choosing a higher deductible. It’s also important to choose a deductible that is not so high that it would cause financial hardship to pay following an accident. In that case, it may make more sense to choose a lower deducible and pay a bit more in premiums.