Car insurance is one of the many frustrating yet necessary elements of our everyday lives. One of the biggest sources of headaches among drivers is understanding and paying for car insurance deductibles.
A deductible is the portion of the bill the insured person is responsible for paying before the insurance kicks in and covers the rest. Depending on what kind of auto insurance you have, there might be different deductibles for different policies. If you must pay a high deductible, you may claim it among your damages in a lawsuit. Many drivers want to know if their deductible is good, bad, or somewhere in between. Whether a $500 deductible is better than one for $1,000 is up to you and what you can afford. If you live in a no-fault state, you might still encounter deductibles even though no showing of fault is required. While insurance coverage is important, you should consider the potential deductibles when selecting an insurance policy.
If you are in a crash or collision, talk to our car accident lawyers about claiming the cost of your expensive deductible and other damages in a free case review by calling Rice, Murtha & Psoras at (410) 694-7291.
What Are Car Insurance Deductibles?
A car insurance deductible is the amount of money an insured person is required to pay according to their insurance policy before the insurance company pays for anything else. Deductibles are a pretty standard element in many insurance policies, not just auto insurance. You will likely encounter deductibles for health insurance, homeowner’s insurance, and renter’s insurance.
People often encounter deductibles when filing claims with comprehensive or collision insurance policies as part of their auto insurance. They are less common when liability insurance policies are involved. Exactly what your deductible is depends on state requirements and the terms of your specific policy. Whether you must pay a deductible also depends on how you file a claim.
If you file a third-party claim against the other driver’s insurance, you probably will not pay a deductible. When filing a claim with someone else’s liability coverage, you should not have to pay a deductible before your damages are covered. Similarly, if someone else filed a third-party claim with your liability insurance, neither you nor they would pay a deductible.
Comprehensive and collision policies are often optional, although this might vary by state. When you file a claim with these policies, you typically file with your own insurance. Collision policies tend to cover you when you collide with other objects, whether they are vehicles or not.
You might file a collision claim if you accidentally strike a telephone pole. Comprehensive policies cover various damages that might not involve driving, such as theft, vandalism, or weather-related damage. In these situations, you will likely pay a deductible before the remainder of your damages are covered.
How Car Insurance Deductibles Affect Claims in Car Accident Cases
Your deductible may affect your claims and damages in a car accident lawsuit. You must pay the deductible before your insurance pays for anything else. For those whose damages do not exceed their insurance deductible, insurance might pay for nothing. For example, suppose your deductible is $500, and you incur only $450 in damages. You would pay the $450 out of your own pocket, and the insurance company likely would not cover anything.
For others, deductibles can be very high. In some cases, people struggle to pay their deductible so that insurance will cover everything else. Deductibles may be claimed as part of your damages in a lawsuit. Even if the insurance company does not end up covering much or does not cover anything, you can still get compensation for your expensive deductible payment.
Even if your expenses are somewhat less than your deductible and the insurance company does not need to pay for anything, you can still claim the money you paid as part of your damages.
What is Considered a Good or Bad Car Insurance Deductible
Car insurance deductibles are not all the same. Many drivers can choose their deductibles when they initially purchase an insurance policy. Generally, the higher your deductible, the lower your premiums.
For those who cannot afford high premiums, the option of a higher deductible in case of an accident might be appealing. Unfortunately, paying the high deductible might be difficult when an accident occurs.
Deductibles may vary greatly depending on your insurance plan. Many deductibles are as low as a few hundred dollars. Some higher deductibles may reach $1,000 or more. A “good” deductible is hard to determine, as what is considered good will vary based on each person’s needs and financial situation.
Generally, a deductible somewhere between the high and low ends of the spectrum is considered good. Think of a good deductible as a Goldilocks situation. You do not want it too low, as your premiums might be very high, and you do not want it too high, as you might not be able to afford it if an accident occurs.
Is a $500 or $1,000 Deductible Better?
Although deductibles may vary based on state laws and specific policy terms, $500 tends to be a rather common value for deductibles. On the higher end of the spectrum, $1,000 is also common. If you are choosing between insurance plans and are considering different deductibles, you might be wondering which is better. This is not an easy question to answer, and the right choice will depend on what you want and can afford.
If you have a lower deductible, around $500 or less, you are more likely to have higher premiums. Your premium is the regularly occurring payment that keeps your policy active. You might pay premiums monthly, quarterly, every 6 months, or even just once a year. For those with a lower income, keeping up with high premiums might be difficult. As such, you might choose a policy with a higher deductible closer to $1,000 or more to make your premiums more manageable.
On the other hand, having a lower deductible might make paying for damages after an accident easier and more affordable, even if it means dealing with higher premiums. At the end of the day, the choice is yours.
Is a $2,000 Car Insurance Deductible Too High?
For some, deductibles can become so high that it makes paying for expenses related to a car accident nearly impossible. A $2,000 deductible is definitely on the higher end of the deductible spectrum. Even so, it might be a good choice if you have more financial resources that make the $2,000 payment feasible.
Having a very high deductible like this may keep your premium payments very low. You might set aside the money for the deductible in a separate bank account, ready to be used if the need arises someday. Meanwhile, your premiums are low and very manageable. If you have the income and financial resources, a high deductible like $2,000 might be a smart plan. However, for those on hard times or more limited resources, a $2,000 deductible might not be wise.
How Car Insurance Deductibles Work in No-Fault Insurance States
No-fault insurance policies tend to cover a lot more than just vehicle damage. If you live in a no-fault state and have such a policy, your insurance may cover things like medical expenses, lost income, and more. Depending on your state and specific insurance policy, you might still have to pay a deductible.
Deciding what kind of deductible you want to pay when you initially purchase your insurance plan is a bit more complex in no-fault insurance situations. Since no-fault plans often cover medical expenses related to car accidents, you should consider your health insurance if you have it.
If you have great health insurance, you might select a no-fault insurance plan with a lower deductible and less coverage since your health insurance will likely cover most of your expenses. If you do not have health insurance, a no-fault insurance plan with greater medical coverage might be a better idea, even if it comes with a higher deductible.
How to Find Car Insurance with the Best Deductible
Finding and buying car insurance can sometimes feel like a very high-pressure situation. After all, drivers are required by law to carry a certain minimum level of insurance or face serious consequences. Remember, there is no single option for car insurance, and finding the right policy with the best deductible for your lifestyle means you have to shop around.
Insurance companies tend to have legal departments of their own that make sure that their policies and services comply with state laws. At the very minimum, an insurance company should be able to offer insurance that meets your state’s minimum requirements. You can check with insurance companies about what kind of policies they offer, their deductibles, and their premiums.
If you are not sure how to proceed, talk to an attorney. Insurance policies are contracts, and a lawyer can help you review an insurance policy’s terms and conditions to ensure you are getting your money’s worth.
Considering Deductibles When Selecting Optional Car Insurance Policies
As discussed earlier, comprehensive and collision insurance policies are often optional, depending on your state. These are not the same as liability policies that cover you when someone else files a claim against you. Instead, these are your own policies you would file under, and a deductible might be required.
If you are in the market for collision or comprehensive policies, you should consider the possible deductibles. Having additional policies might raise your premiums if these policies are optional and in addition to state-mandated minimum insurance requirements. Again, your decision might come down to weighing deductibles against premiums.
Some people live in areas prone to crime and theft or where damage to their cars is more likely. For example, if you live in a colder climate and your home is on a steeply sloped road, you risk damage from icy sliding accidents. Many such accidents are covered under collision or comprehensive policies. In such cases, consider how high your deductibles are compared to coverage.
Call Our Car Accident Lawyers for Help After a Collision
Call our car accident lawyers of Rice, Murtha & Psoras at (410) 694-7291 to set up a free case evaluation and talk about claiming the cost of your expensive deductible along with other damages.