A car deductible is the money one pays out of pocket for damages caused to the car in case of an accident. It means that in case of accident, the car owner will have to pay some money which is known as deductible and the insurer pays what is above the deductible. If a car is involved in an accident and the cost of repair is $2000; and they had agreed when taking the policy that the deductibles for the car is $500, the car owner will be responsible to pay $500 and the insurer pays for the remaining $1500 to repair the car. Deductible rates vary from one state to another; so one should inquire from their insurer the deductible rates of the state they live in but in most states, the deductible rates range from $200 to $1000 depending with the car one drives.
Deductible rates will always depend on several factors that should be well explained by the insurer and understood by the car owner before taking the insurance policy of the car. Voluntarily deciding to take higher deductible rates for motor trade insurance policy means that one will have to be paying lower insurance premiums since the car owner will be responsible for high expenses to repair the car if an accident does happen. This means that at the long run, the car owner will be saving money but in case an accident does happen, they will be responsible to pay more money to repair the car unlike when they took lower deductibles. In general, it can be said that the higher deductible one sets for their motor trade insurance policy, the lower the financial risks they put themselves into in times of accidents. Info Taken from motortradeking.co.uk
Typically, deductibles are selected if one opts to insure their cars comprehensively, on auto loan coverage and on collision coverage and the minimum rates here are set by the insurer and the insurer has to abide with the state’s laws governing the deductible rates. For better insurance rates, one should consider taking high deductible which will lower their insurance premiums per month that will lead to saving substantial amounts of money that at times are higher than the money for repair one will be required to pay during accident. However, one should assess their financial ability such that they will be able to pay for the expenses if an accident were to happen. Deciding for high deductibles also sets one’s mind such that they will avoid the factors that can cause accidents for them not to spend so much money repairing their cars during accident times. When one is driving an old car, they can opt to deduct collision on their cars since old cars are not known to be fast hence their risk of getting involved in a collision accident are very minimal unlike fast cars which also translates to better motor trade insurance premiums.
However, if an accident does happen and the investigations take long and the car owner decides to repair the car as they await the investigation to be completed and the fault for the accident is discovered to have been caused by the other driver, the car owner will be refunded all the money used to repair the car including the deductible. This means that deductibles on car insurance do work but only applies if the car owner is the one with the fault of the accident but if the driver who caused the accident is of the other car, their insurance of the other car will be liable for the car repairs