American Family Insurance has a new and affordable way to protect your vehicle and wallet from unexpected expenses. The decreasing deductible is an optional coverage that helps you reduce your out-of-pocket expenses when you need to file an auto insurance claim. But what is the difference between your insurance premium and your deductible? The premium is the amount you pay per month, every six months, or annually to maintain your policy. Your deductible is the amount of money you'll have to pay out of pocket before your insurance coverage goes into effect and pays your claim.
When it comes to the relationship between your deductible and your premium, generally, the lower your deductible, the higher your premium. That's because you're paying for lower out-of-pocket costs if you file a claim, so your future claim payments may cost the insurance company more than someone with a higher deductible. On the other hand, the higher your deductible, the lower your premium. In general, the lower your deductible, the more you pay in premiums.
However, because the deductible is lower, you'll pay less out of pocket for expenses related to car repairs after an accident. With a higher deductible, your premium rate is usually lower, which means your insurance costs you less than someone with a low deductible. But that also means you pay more out of pocket for car repair costs before your insurance goes into effect. Do you have more questions about your car insurance deductible? Contact your American Family Insurance agent to help you better understand your car insurance policy and adjust your deductible if you need a change.
Similarly, if you've never had an accident and live in a low-traffic area, consider choosing a high deductible for your collision insurance policy. If you live in an area with a high risk of suffering one of these natural disasters, know how much deductible you will have to pay if a disaster occurs. If the other driver is officially deemed to be at fault, your insurance company can pay for repairs if you file them and you won't have to pay your deductible. Start here, review your policies, and talk to your insurance professional to find out exactly how your deductibles work. There are exceptions to this practice in Florida and Louisiana, where hurricane deductibles apply once per season rather than per storm.
However, if a driver damages their own vehicle and wants to file a claim for repairs under their own collision coverage, they probably owe a deductible. You can choose different deductibles for different types of coverage, so you should consider the likelihood of filing each type of claim. Every driver's financial situation is different, so there's no one-size-fits-all deductible. Collision protection, comprehensive coverage, uninsured motorist coverage, and personal injury protection typically have an auto insurance deductible. If you prefer to pay a higher monthly amount for the safety and predictability of low out-of-pocket costs for high-cost health care, you may want a low deductible in your health plan. In general, drivers must select a deductible for comprehensive coverage, collision coverage, and personal injury protection.
Many insurers set a minimum deductible but individuals can reduce potential out-of-pocket expenses substantially over time. When a disaster strikes your home or you have a car accident, the deductible is subtracted or deducted from what your insurance pays for a claim.