The word deductible gets thrown around a lot in insurance, it’s one of the first words you hear in policies, plans and after accidents and claims. What is your deductible? What does that even mean?
Many people confuse deductibles with premiums or think that it’s the total amount they have to pay for a claim. In reality, a deductible is the amount of money you agree to pay out of pocket before your insurance coverage kicks in to pay for covered losses.
For example, if you have a $500 deductible on your car insurance policy and you get into an accident causing $2,000 in damages, you would pay the first $500, and then your insurance would cover the remaining $1,500 (subject to any policy limits or exclusions).
The benefits of a higher deductible is insurance cost goes down. Depending on your financial situation it might make more season to go with a lower deductible. If you choose a $1,000 deductible but don’t have that type of money siting around. You should pick a lower deductible option.
The premium is actually the amount of money you pay to the insurance company in exchange for insurance coverage, annually.
Understanding deductibles and premiums is important because it directly affects your budget and the level of coverage you can afford. Higher premiums often correspond to more extensive coverage or lower deductibles, while lower premiums may come with higher deductibles or more limited coverage.
Insurance can be confusing and obfuscated, here at Bulger Insurance, we want to make it simple and advocate for the best policy for your needs! Contact us today to see how we can help!
