How does auto insurance deductible work and Coverages

If you are looking for an auto insurance, you may have found that you are responsible for a deductible, but, how does auto insurance deductible work? First, what is a deductible in auto insurance? The deductible is the amount of money that you will have to pay when you fill a claim with your insurance. Once your claim is accepted, your insurance will pay for the rest of the damages. 

Which auto coverage considers deductibles? 

Some auto insurance coverages require you to set a deductible amount and some not. If you want to know how does auto insurance deductible work, you first need to know in which cases you will need it.

Liability insurance

Deductibles are not part of the auto liability coverage. When you are at fault in a car accident, your auto liability coverage will cover the other drivers expenses in two ways:

Bodily injury. Those can be medical bills and loss of income.
Property damage. Includes repairs for the vehicle or property and legal defense in case of being sued for the damages. 

Your auto insurance will pay the other driver damages up to your coverage limit, but deductibles are not contemplated in this type of coverage. You don’t have to pay deductibles, but if the cost of the damages exceed your limit, then you have to pay the remainder. That’s why you should not choose the lowest limit in your liability car insurance.

Collision coverage

Deductibles are required with an auto Collision coverage. The collision coverage is the one that covers your cars damage when you get into a car accident. It doesn’t matter who is found at fault in the car accident. 

This means that if you fill a claim for your car damages, you should pay your deductibles. Then your auto insurance will pay for the rest.

Collision coverage is not obligatory, but if you finance or lease your car it may be required by your car dealership.

Comprehensive coverage

You can also expect to pay deductibles if you use an auto comprehensive coverage. A comprehensive coverage will cover the damages when is not caused by collision with other vehicles.

Some of the damages that can apply are: theft, vandalism, fires, weather events, falling objects like rocks or trees, and even collisions with animals. 

Uninsured and under insured coverage 

This coverage protects you and your car of damages from drivers with low insurance to cover your expenses or have not insurance at all. Some insurance companies pair both: under insured and uninsured motorist coverage, but in some states you get them separately.

Some states in the U.S demand citizens to pay certain amount on deductibles when file a claim for uninsured and under insured coverage. Deductibles in this kind of coverage can vary. You may want to specify with your auto insurance company if you need to pay a deductible. 

Uninsured and under insured coverage has two components: the bodily and property damages. With an under insured coverage, your insurance will pay for the amount remainder that the other driver’s insurance couldn’t pay. But, what if the other driver doesn’t have insurance at all? 

Let’s see the two elements of uninsured motorist coverage:

Uninsured Motorist Bodily Injury Coverage (UMPD)

Will cover medical bills for you and your passengers when the driver at fault doesn’t have an auto insurance. This can also protect you if it was a hit-and-run, but we recommend you to double-check with your auto insurance. Usually, you won’t have to pay a deductible, but it may vary from state to state.

Uninsured Motorist Property Damage Coverage (UMBI)
It helps you to pay your car repairs when hit by an uninsured driver. You may not find this coverage in all the states and if you find it you’ll see their coverage can vary, some may not cover a hit-and-run accident. 

In uninsured motorist property damage, you most likely have to pay deductibles. 

How does auto insurance deductible work

Now that you know when you may need to pay deductibles, how does auto insurance deductible work? Let’s say that you had a car crash, and you fill a claim for damages on your car. If you have a deductible of $500 and the cost damages were of $2,500, your auto insurance will cover $2,000.

How much do I have to pay from deductibles? 

Good news are that you can choose your deductibles, but deductibles and premiums are connected and can determine the cost of your car insurance. How? If you set a low deductible, your premiums will increase and if you choose a higher deductible, your premiums decrease. We always suggest to our customers to set their deductibles as high as possible, but do not choose an amount they will not be able to afford.

Are you leasing or financing your car? Then, your car dealership may also have a specific amount for deductibles that you must set for your vehicle. You need to verify which is the limit amount.