What is a Deductible?

A deductible is the amount of money that you must pay out of pocket before your insurance provider will pay for any expenses related to an insurance claim. Deductibles are fixed amounts that vary depending on your policy. Typically, deductibles and premiums are related to one another. Generally speaking, the higher your deductible, the lower the premium, and vice versa.

For example, if you opt to pay a low premium every month (let’s say, $50), then your deductible will likely be relatively high. So, in the event of an accident, you will be required to pay more out of pocket than someone who has been paying higher premiums. Essentially, this correlation ensures that insurance companies receive a certain amount of money, regardless of when they get it.

Deductibles and Car Insurance

With car insurance, deductibles are typically applied to claims arising from damage to or loss of the policyholder’s own vehicle. Third-party liability coverage plans do not have deductibles, since the third party will attempt to recover any loss for which the policy holder is liable.

When selecting auto insurance, there are a variety of polices from which to choose, with varying premium rates and deductibles. You should never accept a policy that has a deductible that is more than you could afford to pay in the event of an accident. While such policies may have lower premiums, they can put you in serious trouble if you get into a wreck.

Contact Us

For more information about deductibles and ways to reduce your monthly premiums, contact the Chicago auto insurance agents of Insure on the Spot. Call 1-888-972-7283 today to schedule an appointment.