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Auto Insurance Coverage:Understanding Deductibles and How Deductible Levels Can Effect Your Insurance Premiums

If you are in the process of purchasing a new or replacement automobile insurance policy, you may have some basic questions about a typical car insurance policy. In this regard, you may be wondering what is meant by and involved with endorsements and changes to your automobile policy. Through this article, you will be provided with some basic information about understanding endorsements and changes to your automobile insurance policy.

What is a Deductible?

While you may have heard the term, you may not know precisely what is meant by the word deductible when it comes to considering a policy of car insurance. In simple terms, the deductible or a deductible is the amount of an overall claim that you will be responsible for paying yourself.

By way of example, letís imagine that you have been involved in an accident that results in $2,000 worth of damages. Letís further assume that you have a deductible associated with your car insurance policy in the amount of $500. You will be responsible for paying $500 of the claim while your car insurance company will be responsible for paying the remainder of the amount due and arising out of the accident in question.

How Does Your Deductible Effect the Premium Charged by a Car Insurance Company?

You actually can control to some degree the costs associated with your car insurance by considering the deductible that you have associated with a particular car insurance policy. Generally speaking, if you increase the deductible associated with a car insurance policy -- in other words, if you agree to pay more of the costs associated with a car accident -- the premiums that you will pay on a car insurance policy will lower.

Conversely, if you are willing to pay a bit more for insurance and simply do not want to have to fork over a significant amount of money out of your pocket in the event of a car accident, you can lower the deductible associated with the car insurance policy your purchase. While you will pay more in car insurance premiums over time, if you do end up involved in an accident, you will not have to come up with a handful or more to deal with a deductible associated with a policy for a car insurance company.


When it comes to obtaining coverage from a car insurance company, you will want to make certain that you consider the issue of the deductible. While contemplating whether a lower or higher deductible is best for you, you will be better able to budget for your insurance premium needs now and into the future.


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