When you shop for a car insurance policy, you will have an opportunity to choose a deductible from a range of options. It’s important to understand how deductibles work and to consider your own circumstances and risk so you can select the right deductible for you.

1.      What Is a Car Insurance Deductible?

A deductible is an amount you will have to pay yourself before your insurance policy will cover the cost of a claim. Say, for example, you get in an accident and your car needs repairs that will cost $5,000. If your policy has a $1,000 deductible, you will need to pay that amount out of your own pocket, and your insurance carrier will cover the remaining $4,000 in repairs.

2.      How Can You Choose a Deductible?

Insurance companies generally offer several deductible amounts and set premiums based on the size of the deductible. If you choose a policy with a lower deductible, you will pay less if you file a claim, but the tradeoff is that you will have to pay higher monthly premiums. If you select a higher deductible, you will have a higher out-of-pocket expense if you need to file a claim, but you will pay less in premiums each month.

If you’re a safe driver and you believe it’s unlikely that you will get into an accident, a high-deductible policy may make sense for you. Just be sure that you have enough money available in an emergency fund to cover the cost of the deductible if you get into a crash and need to have your car repaired as soon as possible.

If you believe there is a good chance that you will have to file a car insurance claim, or if you don’t have enough money saved to cover a high deductible if you get into an accident, you may be better off choosing a policy with a lower deductible. This option may also make more sense for you if your car isn’t worth much. If you’re involved in a serious collision and the insurance company declares your vehicle a total loss, it will pay you the vehicle’s actual cash value. If that value is low, and you have a high deductible, you won’t receive much of a payout. You will get a larger amount from the insurance company if you have a lower deductible.

3.      Get Help Choosing a Car Insurance Policy and Deductible

Deductible amounts and premiums vary from one insurance carrier to another. Petruzelo Insurance can discuss your options, gather quotes from several leading insurers, and help you choose the right policy and deductible for your needs and budget. Contact us today to learn more.