What is an Insurance Deductible?

Here’s what you need to know about insurance deductibles.

If you’ve looked over your auto or homeowners insurance, then you’ve probably seen the term “insurance deductible” popping up all over your policies.  But what exactly is a deductible and why is it important to your insurance coverage?  Here’s everything you need to know about your insurance deductibles.

What is a deductible?

Your deductible is the amount of money you agree to pay out-of-pocket towards an insurance claim before your coverage kicks in.  For instance, say you set an auto insurance deductible of $500.  If you were to get into a car accident and wanted to access your auto insurance, then you would have to first pay your $500 deductible before your coverage would step in and cover the remaining cost of the claim.  It’s also important to understand that your deductible and premium have an inverse relationship.  This means that the higher your deductible, the lower your premiums will be, and vice versa.

How does my deductible amount affect my coverage?

It’s important that you set your deductibles at an amount that you can actually afford to pay.  Some policyholders set their deductibles very high in an attempt to save money on their insurance premiums.  However, this is a very risky strategy.  As previously mentioned, you have to be able to pay your deductible before you can access your insurance coverage.  If you set your deductible higher than you can actually afford, then you risk not being able to use your coverage when you need it the most.  Luckily, most home and auto insurers allow you to adjust your deductible amount whenever you need to.

This is what you need to know about your insurance deductibles.  Do you have more questions regarding your personal insurance coverage?  Then don’t hesitate to reach out to the experts at Robert J. Los Insurance Agency in Hamburg, New York.  Our dedicated team is ready to assist you with all your insurance needs.  Contact us to get started today.