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While it’s a common term, it’s one that leads people to assume that their policies will pay for any claim they present. In actuality, a full coverage policy has limits.
When you’re shopping around for auto insurance, it’s important to know what you’re paying for before you select a product. You can’t build the best possible plan unless you know what every component of a policy is.
Since all full coverage plans include deductibles, it’s very important to understand just how they work and what the average auto insurance deductible in your state is.
Here’s what you need to know about deductibles on a car insurance policy.
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Table of Contents
Liability coverage is required in states where the at-fault party in an accident is responsible for paying third-party personal injury damages.
These states operate under what’s called a tort auto insurance system.
Since the coverage pays for third-party damages and not your own, no deductible is charged.
Property Damage Liability coverage is required in both tort and no-fault states. Instead of paying for medical bills, this form of coverage pays to repair third-party property that’s damaged in an accident.
Just like Bodily Injury, there’s no deductible assessed against you when a claimant makes a Property Damage claim. There is, however, a coverage limit.
If your claim exceeds the limit, you’re responsible for paying the difference.
Property Damage coverage and physical damage coverage may sound alike, but they are two very different forms of protection.
Property Damage is a third-party coverage that must be included in a basic policy, and physical damage is an optional first-party coverage that you can elect to carry on one or more covered autos.
If you add physical damage coverage to your policy, you can choose to carry only comprehensive or both comprehensive and collision.
If you decide that you want coverage for your vehicle, it’s your job to decide if you want to carry a smaller or larger deductible.
The deductible can make a huge difference on your premiums when you have a spotty driving record, or you’re an inexperienced driver.
By raising your deductible, you can keep your premiums lower and still enjoy the peace of mind the coverage gives you.
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The deductible doesn’t make as big of a difference for comprehensive coverage as it does for collision.
Comprehensive rates are more dependent on the vehicle that you own and the territory where you live.
If the property crime rates are high in your area or your vehicle is expensive, you may need a higher deductible.
If you want to see a difference in your rates, raising the collision deductible is wise. Collision insurance rates are based on your driving record and the history or other drivers who have access to your vehicle.
High-risk drivers almost always need to carry high collision deductibles. Here’s how much you could save:
You’re obligated to pay your deductible whenever you file a claim for damages. In some cases, your company might waive your deductible, but for virtually all comprehensive claims your deductible will be charged.
If your car catches fire, is vandalized, or is stolen, the deductible amount that you carry will be deducted from your settlement offer. The only time where there’s an exception for a comprehensive claim is when you have a glass claim.
Glass claims present challenges for insurers because the cost to repair glass damage is often lower than the policy’s deductible.
To keep customers from driving with a damaged windshield, some companies will waive the deductible and cover the total cost of chip repair. This option is usually offered when the windshield has a small crack that can be repaired without replacement.
Having a collision claim doesn’t mean that you’ll always be responsible for paying a collision deductible.
There are a few circumstances where you’ll file a claim against your insurance, but you won’t be responsible for paying a portion of the loss.
Here are the most common scenarios where your deductible will be waived or reimbursed:
If you live in a state with any no-fault insurance system, you’re required by law to carry Personal Injury Protection.
Personal Injury Protection pays for your medical bills, rehabilitation costs, and some of your lost income after you’re injured in a car accident.
In some states, Personal Injury Protection requires a deductible. You’ll have to check with an agent in your area to see if you have the option to carry a deductible for Personal Injury Protection.
In most cases, you have just a monetary limit that you must select as you’re building your policy, but the rules vary from state to state and company to company.
If you’re shopping for auto insurance, it’s good to know how your decisions during the buying process can affect your coverage when you need to file a claim.
As you’re shopping around, you can easily compare the rates for high and low deductibles to make a decision. The process is even faster when you use an online rate comparison tool.
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