Insurance deductibles are intended to keep the cost of insurance low by eliminating very small claims and the cost of dealing with them. Deductibles apply to many different types of insurance but are most common on property and casualty insurance policies. Health insurance also has deductibles, and life insurance policies never have them. Most people encounter their first deductible when they buy auto insurance and have to choose the deductible amount for full coverage insurance when they finance a new or used car purchase.
Deductibles Only Apply to Policyholder’s Loss Claims
When involved in an accident at which you are at fault and needing to file an insurance claim to care for the other person’s vehicle, as might happen if driving a 4×4 and knocking over a costly sport
bike parked on a lot, any deductible only would apply to the vehicle for which the auto insurance policy is drawn up. Any claims for repairing the motorcycle in this instance would not require a deductible. The deductible only applies to the insured vehicle and is intended to prevent the owner from filing minor claims for small things like having a flat tire. Deductibles also reduce the number of potential lawsuits over very small matters, and that helps to keep the price of insurance policies lower.
Deductibles Amounts Are Adjustable
People who want to reduce the cost of their auto, home or other insurance can do so by increasing the deductible amount. In most cases, deductibles can range from zero to $1,000. Some larger deductibles are available from some insurers, but most financed vehicles and common sense require deductibles of no more than $1,000 on autos. Most people have a deductible of $500, which is a relatively affordable amount for most working people to come up with in the event of an accident and needing to replace a vehicle. If the vehicle is totaled, the insurer will write a check up to policy limits minus the deductible. If repairs are needed, the insurer will pay up to policy limits minus the deductible. That means the policy holder will need to pay the deductible amount when insured repairs are done.
How much is the deductible you carry on your vehicles?