When you call an insurance company for an auto insurance quote, the agent will not give you a quote until you answer a series of questions. These questions tell the agent your risk level and other details about you, and the answers help the agent calculate the costs of your policy. One question you can expect the agent to ask is the amount you would like for your deductible. The amount you pick will affect your policy and budget. In fact, here are three ways your deductible affects you.
There Might be No Effects
You do not need to choose a deductible if you purchase a liability-only car insurance policy. A liability-only policy primarily protects other drivers through your car insurance, and it provides no compensation to you if you get in an accident. Therefore, you will not choose a deductible for the policy if you have liability-only coverage. If you only need liability insurance, there will be no deductible, so you will have no effects from it.
It Can Affect Your Policy Costs
The main effect of a deductible is the cost of your policy. A policy with a low deductible is nice to have but will lead to higher costs. Having a low deductible presents higher risks to the insurance company. Therefore, they will offer a discount on your policy if you choose a higher deductible. For example, going from a $200 deductible to a $1,000 deductible could result in saving 40% on your car insurance premiums. If you are worried about your policy's costs, raising the deductible will instantly provide money savings to you.
It Affects Your Finances If You File a Claim
The last effect to understand is the way the deductible affects you if you file a claim. If you have an accident and file a claim, your insurance company will pay part of the claim if they approve it, and you will pay the other part. Suppose the damage from the accident is $2,500. If you have a $200 deductible, you pay $200, and the insurance company pays the remaining $2,300. If you have a $1,000 deductible, you pay $1,000, and the insurance company pays the remaining $1,500.
Now that you see the deductible effects, you can choose the right amount for your needs and checkbook. Talk to a local car insurance agent if you have any questions about deductibles or auto insurance coverage.