How to Figure Out Auto Insurance Deductibles

An auto insurance deductible is determined by the policy owner. A deductible is a form of self-insurance that is chosen by the buyer. It is used to lower the risk of loss for the insurer and lower the premium cost. Figuring out an auto insurance deductible or any deductible for an insurance policy own requires the policy owner to choose the level of self-insurance it is willing to take on or retain.

Setting a Deductible

Auto insurance deductibles can vary depending on the insurance company and their products. The insured chooses a level of deductible that meets their financial need and produces a policy premium that is affordable. An insured should resist choosing a high deductible for the purpose of lowering premiums, based solely on the cost savings. This is because the higher the deductible that is chosen, the more the insured will need to have to come out of pocket in the event of a loss.

Deductible Is the First Dollar Expense

A deductible is the first dollar expense that is paid by the insured. When a loss takes place, the insured needs to pay or meet the deductible set in order for benefits to be payable. Choosing a high deductible means the insured should have some means in which to meet their level of commitment associated with a loss.