05 Oct How to Choose the Right Auto Insurance and Home Insurance Deductibles?

When you’re shopping around for auto insurance or home insurance, one of the decisions that you’re going to have to make involves your deductible. As you play with the coverage numbers on your screen, moving your deductible up and down, you’ll notice that your overall insurance premium changes as well.

Why do deductibles matter? And how can you choose the right amounts? It’s a very careful balancing act. But luckily, we can help!

What Exactly is a Deductible?

To put it simply, the deductible is the amount that you’ll be required to pay if you need to file a claim. It relives a bit of the financial risk from the insurance company and puts some of it onto you. For example, if you have a $500 deductible and need to file a claim on your car insurance, you’ll end up paying that $500 out of pocket while your insurance company covers the rest.

In other cases, your deductible is simply deducted (hence the name of them term) from the amount that your insurance company pays you. If you end up with roof damage due to a storm, the company will cover the loss, but they will take out the amount of your deductible, so you’ll end up with enough to pay for the damage, minus that amount.

Deductible Amounts

Usually, deductibles appear as dollar amounts. Some of the most common ones range from $250 to $1,000. However, in some cases, they are percentages. You might see your deductible options range from 5% to 15% of your overall claim amounts. Whether or not you can choose your deductible as a dollar amount or a percentage depends on the laws of the state that you reside in.

It also depends on the type of insurance that you have. In many cases, the dollar amount deductible applies to car insurance, while the percentage option applies to homeowner’s insurance. Of course, this can vary based on where you live and which insurance company you choose to go with.

Why Deductibles Matter

Your deductible not only plays a significant role in how much you have to pay out of pocket should you need to file a claim, but it also can change the overall costs of your premiums. In most cases, when your deductible goes up, your overall premium cost goes down. For example, if you have a deductible of $500, then your premium will cost less than it would if your deductible is $250.

How do you choose which deductible to go with? It’s important to balance your overall premium price with your deductible. You don’t want to end up with a deductible that you cannot afford, and you don’t want your insurance premium to be unaffordable either. Ideally, you should ask your insurance agent about the numbers, in order to find a policy that is the best fit for your budget.

Contact Spivey Insurance

If you’re looking for an insurance premium, have questions about deductibles, or anything else insurance related, contact Spivey Insurance. Our knowledgeable agents are ready to help you with all of your insurance needs.