Auto Insurance Deductible Considerations

convertibleWhen you apply for Plano auto insurance coverage, your choice of deductible may seem pretty straightforward however, there are some nuances to auto insurance deductibles that you should be aware of.

·         There are multiple deductibles in your policy: Your auto insurance policy probably doesn’t have just one deductible. Instead, there may be many different deductibles for the various coverages offered. For example, let’s say you are in an accident that damages your vehicle and causes bodily injury to another. If you have collision coverage with a $500 deductible and bodily injury liability protection with no deductible then your initial out-of-pocket costs will be $500 and you won’t pay more unless any of the claims exceed your coverage’s limits. But your personal injury deductible may be higher, as might your comprehensive.

·         Deductibles are per vehicle: If your auto insurance policy covers multiple vehicles including those driven by your spouse and children then you have multiple deductibles. So if you and your spouse are both in an accident on the same day you will be expected to pay the deductible for each accident. And if you happen to be in an accident with another car covered on your policy, such as when you back out of your garage, you can still be charged two separate deductibles. Not only does this make it extremely important that you choose deductibles you can actually afford to pay, but it also should factor in to your decision about whether or not to pay for damages out of your own pocket or to file a claim because with two claims for one accident, you could see an increase in your auto insurance rates.

·         Deductibles are per incident: Auto insurance deductibles are different from health insurance deductibles. Instead of all your out-of-pocket deductibles adding up throughout the course of the year and your personal out-of-pocket responsibility ceasing once you’ve paid your deductible, each incident is subject to a deductible. For example, let’s say you have a car accident in September that results in $500 worth of damages to your car. You have a $1000 deductible. In this instance your insurance company would pay no claim because your damages are less than your deductible and you would be expected to pay $500 out-of-pocket to have your car fixed. Then, let’s say in December you have another accident this one with $1500 worth of damage. Now you would be expected to pay $1000 of that damage because that’s your deductible and the insurance company would pay the remaining amount.

·         If your car is totaled, you don’t pay a deductible: If you’re car is totaled in an accident and you go through your insurance company to place the claim, you do not have to pay your insurance company the deductible. In fact, the deductible is something that you will always pay to vendors to fix your car – not to the insurance company. However, in the event of a totaled vehicle, when the insurance company writes the check for the value of the loss they will reduce it by the amount of your deductible.

·         Deductibles can be reimbursed: If you have an accident and another driver is at fault you can make a claim through your insurance company which will require you to pay your deductible for a portion of the repairs. However, your insurance company will work to retrieve both their damages and your deductible from the other driver’s insurance policy which means you may get refunded your deductible. This would not be the case if the other driver was uninsured or underinsured which is why uninsured and underinsured motorist coverage is so vital. If the other driver is sufficiently insured, you do have the option to file a claim with their insurance company however you should still let your own insurance company know about the accident and the claim. Generally, calling your own insurance company and agent first will ensure that you take the correct subsequent steps to be made whole again.

If you have questions about your auto insurance deductible or if you think your deductible might be higher than you can reasonably afford, give us a call 972-649-9007. We can conduct an auto insurance policy review and help make sure you have sufficient protection at an affordable price.


About Insurance Connection USA

Bob Garrison has more than 20 years of executive experience in insurance, marketing, advertising and financial services. In 2003, Garrison formed Insurance Connection USA and has been working with individuals and companies to provide insurance services and employee benefit solutions.
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