What Is an Auto Deductible?

When buying auto insurance, you may come across the term “deductible.” Understanding this term and how it works can help you make informed choices about your coverage.

Definition of an Auto Deductible

An auto deductible is the amount you must pay out of pocket before your insurance kicks in to cover a claim. For example, if you have a $400 deductible and file a claim for $1,600 in damages, you will pay the first $400, and your insurance company will cover the remaining $1,200.

Types of Deductibles

Auto insurance policies typically ask you to choose a deductible for both comprehensive and collision coverage.

• A comprehensive deductible is the amount you agree to pay when you file an approved comprehensive claim. For instance, if you have a comprehensive deductible of $300 and a hailstorm damages your car, you will pay the first $300 of the repair costs.
• A collision deductible is the amount you agree to pay when you file a claim following an accident involving objects or other vehicles. For instance, if you have a collision deductible of $500 and hit a tree, you will pay the first $500 of the repair costs.

Higher deductibles usually result in lower premiums, whereas lower deductibles can lead to higher premiums. Opting for a deductible amount you can comfortably afford to pay out of pocket in the event of a claim is essential.

Deciding Which Deductible to Select

Choosing your deductible amount involves weighing financial risk and personal circumstances. For instance, if you drive frequently in high-traffic areas or have a long commute, you might be at a higher risk of accidents, making a lower deductible more appealing. Consider your financial cushion, driving habits, vehicle value, and comfort with financial risk when deciding.

Auto Insurance in San Antonio, TX

The team at Pride Insurance Agency can help you understand auto deductibles, allowing you to make informed choices about your auto insurance. Contact us today to review your coverage.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.