Personal Automobile Insurance: Physical Damage Deductibles

How much do you have to pay in the event of a claim!?
How much do you have to pay in the event of a claim!?

Many consumers choose deductibles for their automobiles haphazardly and without much thought.  Do you know what your comprehensive and collision coverage deductibles are?  Do you understand what happens in the event of a claim?  Did you ask your insurance expert what would be most appropriate for you?!A large majority of the people that our agency talks to are unwilling to take any advice regarding amending their comprehensive and collision deductibles.  This automatically gives the agent the impression that the insured has a full understanding their coverage, deductibles, and how claims will be settled.  That is, until it is claim time and ultimately too late to amend any of your coverage.  The onus is then put on the producer when the insured is unhappy and is generally accompanied with many accusations that the agent did not do their job properly.

We’ll save the definitions of comprehensive and collision coverage for another post; however, just know this:  they provide coverage for physical damage to your auto.  Obviously – if another driver is liable for the damages, then their liability insurance would apply.  For example, let’s say your vehicle is damaged by hail – do you know how the claim would be handled?  How about if you nick the side of your car while pulling into your garage?  First, you’d call your insurance agent to file the claim.  The agent would tell you to go get an estimate for the damage.  Once the amount of damage is determined and the insurance company verifies that there is coverage for the claim, then payment happens.  However, you will be responsible for the full amount of the deductible before the insurance company pays a cent.  The lower your deductible, the less of a deal this is; however, for people that carry $1000 deductibles or higher in hopes of saving some money on their insurance premiums – this may be quite the surprise.

If your vehicle is only worth $3000 or $4000 – does it pay to carry physical damage coverage?  Probably – but it may not make sense for everybody.  In that same scenario – does it pay to carry $1000 deductibles or larger?  Probably not – however, it is up to the individual and/or family to determine their personal risk tolerance and to choose the deductible that makes the most sense for their financial situation.

The bottom line:  don’t choose deductibles based solely on premium savings – which only go so far.  Understand and be comfortable with the deductibles you choose.  If you haven’t already, take a few minutes to review your coverage and make any changes that you may see fit.

Common sense and an understanding of the claims process go a long way in determining the appropriate deductible for you; however, always, speak with an insurance professional when amending any coverage.