Understanding Auto Insurance Deductibles

 By Ashley Hathaway, Navigator


ms-office-clipart-confusionI would like to introduce you to my friend Jerry. When Jerry’s windshield cracked he called his insurance company to get it fixed. Jerry’s insurance company told him he had a $500 deductible. The new windshield costs $300. Jerry had to pay for it out of pocket. Don’t be like my friend Jerry.

Similar to my friend, many individuals do not know what their deductibles cover and what increment to choose. I would like to take the time to go over deductibles so that you have a better understanding and choose the right dollar amount for you.

The two coverages that come with deductibles are comprehensive and collision. Comprehensive covers you against theft, vandalism, acts of nature, etc. Keep in mind that a lot of insurers will also cover glass (windshields) under this coverage. As a rule of thumb, always make sure to ask your agent if glass is covered under comprehensive or covered separately (again I can’t stress enough don’t be like Jerry!). This is a key factor in determining what deductible to carry. The second coverage is collision. Collision coverage allows you to repair your vehicle if you are at fault accident, hit a tree, or run off into a ditch.

Now that we have that boring insurance stuff out of the way let’s talk about what deductibles to choose. The higher your deductible the lower your premium and vice versa. The most common deductibles are $500 for both comprehensive and collision. If your auto premium is already low, then I say go for it and lower those deductibles. I would recommend $100 for comprehensive and $250 for collision. Comprehensive claims are usually not as expensive as collision claims so carrying lower comprehensive makes more sense. If money is not an issue for you, then I would recommend $1,000 deductibles for both the comprehensive and collision. This way you won’t file a claim for minor things, if you had to you would be able to pay this out of pocket, and the best part is that makes your premium lower. I highly recommend avoid deductibles of $1,000 or more for either coverage. Do not choose a deductible, that if the time came and you needed to file a claim, you would not be able to come up with the money.

I hope this overview will help clarify your auto insurance options, and help you select the right deductibles. Remember that deductibles are personal to you. Feel free to share with your friends and we might just have one less Jerry on the streets.