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Understanding auto insurance is essential to ensuring that you can obtain the right coverage at an affordable price. One aspect of auto insurance that we know can be confusing is the auto insurance deductible.
So what is a car insurance deductible, and how does a car insurance deductible work? Furthermore, when do you pay the deductible for car insurance?
An auto insurance deductible is an out-of-pocket cost that you’re responsible for before receiving a payout from your insurance company. In most cases, either you’ll need to pay your deductible first — before receiving a payout — or your insurance company will subtract the deductible amount from the payout before sending it to you.
You can work with your insurance company to set your deductible amount based on what you can afford and the estimated effect on your rates. Typically, the higher the deductible, the lower your rates will be.
Continue reading this article for an explanation of the insurance deductible, to find out if there is insurance for different types of coverage, and to learn more about how to select the right deductible amount.
For example, let’s say you have a $500 deductible. If you are involved in a covered incident, and the damages total $2,000, you’ll have to pay $500 out of pocket. The remaining $1,500 will be covered by your insurance. Often, your insurance company will determine the total payout amount and cut a check for that number, minus your deductible.
Most, if not all, auto insurance policies include a deductible. Chances are that you have a deductible on your policy, and it’s important to know your deductible amount. You need to know what you could owe and whether it makes sense to file a claim based on comparing your deductible to the total cost of repairs.
Do you have a single deductible or a different one for each type of coverage?
Do deductibles vary by coverage type? For example, is there a unique collision deductible? Different coverage types have different deductible requirements.
For example, in South Carolina, drivers must carry uninsured motorist coverage as a part of the minimum insurance requirement to drive legally. If you only purchase the minimum amount of uninsured motorist coverage, it will accompany a $200 deductible that you’ll need to pay before your insurance company’s coverage will apply.
When are you required to pay your deductible?
Typically, you’ll be required to pay your deductible if you file a claim for any covered incident, if it’s under coverage that includes a deductible. As stated previously, you may need to pay your deductible before receiving your payout. Otherwise, your insurance company may subtract the deductible amount from the payout.
Ways to avoid paying your deductible
In most cases, you’ll have to pay your deductible. However, you can ask the repair shop to consider waiving the cost of your deductible. And for certain types of damage, your insurance company may waive the cost of your deductible. For example, this is common for windshield and other glass repair claims.
What happens if you aren’t able to pay your deductible?
If you cannot pay your deductible, you may not be able to file a claim, mainly if the terms of your insurance policy demand your deductible payment upfront before you receive your insurance payout.
If you need the repairs immediately, you could consider taking out a loan to pay your deductible. If the repairs aren’t catastrophic, you may be able to wait to file a claim until you’ve saved up to pay your deductible.
Additionally, suppose the estimated cost of repairs is less than your deductible. In that case, you might consider avoiding filing a claim altogether and simply paying out of pocket once you have saved the funds.
The Best explanation of Auto Insurance deductible and how it work?
