This article discusses an insurance policy deductible as it relates to a claim involving your insured auto.

What is an insurance policy deductible?

A deductible is an option which may be selected by an insured if their auto policy includes physical damage coverage. If the insured has a physical damage loss which is covered by the policy, the deductible represents an amount of money the insured agrees to pay to repair damages to their auto before the insurance company has any liability for additional damage.

Many insurance companies offer several deductible options. For example, an insured may choose a $500 physical damage deductible. This means that in a covered loss, the insured will pay the first $500 to repair damages to their insured auto and only then will the insurance company consider additional payment for any damage exceeding $500. Deductibles to not apply to liability or medical coverage.

By selecting a deductible, an insured accepts responsibility for some of the cost of repairing damage in a coverage claim, up to the amount of the deductible. In return, the insurance company charges a lower premium for the coverage since they are not responsible for the entire loss amount in a covered claim. The higher the deductible selected by the insured, the lower the cost of insurance (premium).

Individuals who worry about the costs of being involved in an accident may want to consider an Umbrella Insurance Policy.

When buying auto insurance, you may be tempted to just buy the minimum amount of coverage that is required by the state. Doing so may seem like a good way to try and save on car insurance premiums, but the minimum coverage may not be sufficient to pay for your expenses if you are involved in a major accident and are found to be at fault. This could end up costing you a fortune.

This is where a California Umbrella Insurance Policy comes into play. You can purchase $1 million in coverage for about $ 150 – $300 per year, or up to $5 million if you are willing to pay a bit more. An Umbrella Policy only kicks in when your other coverage runs out. Having an Umbrella Policy on top of your standard car insurance may give you peace of mind. If you decide against taking out an Umbrella Policy, at least make sure to do your homework in term of knowing how much coverage you have and its limitations.