subject: Car Insurance Quotes And Deductibles [print this page] Perhaps you've taken a look at several car insurance quotes in the past and not really understood why there are differences in price. The simplest explanation for this dilemma is the fact that there are a large number of circumstances and individual factors that go into determining how much you'll pay. Two of those factors include the total amount of coverage you're looking for and the amount of your deductible. In this article we will speak specifically of the deductible.
Simply defined, the deductible is the amount of cash you will pay upfront on a claim, before your insurance company gets billed for the remainder. For example, if you have a $500 deductible, you will be responsible for that amount of the total bill. If the repair shop charges $4,000 for all the repairs you will be responsible for paying the first $500 and your insurance company will cover the remaining $3,500.
Applying Deductibles
How a deductible is applied, and when it gets paid, is determined by the terms of your policy. However, the most common way of applying deductibles is for you to collect estimates from the various companies you'll be using during the repair/replacement process and send them off to the insurance company. The insurance company would then evaluate those estimates and write you a check for the total amount, less your deductible.
In some cases insurance companies have worked out special deals with individual repair shops. In such cases the repair shop would pay for your towing service and your replacement car rental, and then include the price of those two things in the total bill. They would send an estimate for the entire amount directly to the insurance company who would turn around and send them a check in return. In this type of scenario you are kept completely out of loop.
Higher Deductible, Lower Premium
If you're willing to pay a slightly higher deductible you can get better car insurance quotes. This works out to your advantage in the short term because your lower premium is a greater percentage of your policy than the higher deductible. It works out to the advantage of the insurance company in the long term, as long as you don't have an accident claim, because they will make their profit on volume rather than margin.
Keep in mind that car insurance is all about the amount of risk posed to the car insurance company versus the potential profit they can make by investing your premiums. All a deductible does for them is guarantee a certain amount of commitment from you. The deductible is designed primarily to make accident claims more of a pain in your wallet so that you are encouraged to drive more safely in the future. They also relieve the insurance company of the cost of having to deal with minor fender benders which could be applied to your deductible.
Whether you choose a higher deductible or lower one, be sure you're getting the insurance policy that's meets all of your needs. Any car insurance quotes you look for should take into account the value of your car, who will be driving it, how far it will be driven in a given year, and so on. Then, if it doesn't cover enough loss or damage to make you comfortable, move on to other companies that supplied you with car insurance quotes.
by: SarahJean
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