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What is an insurance deductible

Seven Things To Know About Insurance Deductibles

Alaina Tweddale and Manisha Pradhan

Have you ever wondered how deductibles work when it comes to homeowners and auto insurance? Many people do – this is why we’ve put together this guide to help you understand the basics of deductibles. We want to help make it easy for you to choose the best one for your situation.

1

What Exactly Is an Insurance Deductible?

A deductible is the portion of the costs that you pay in a claim when you need to get your car repaired after an accident or your home repaired after a loss. The deductible amount will be paid by you specific to your property that’s damaged, whether it’s your car or your home. This means you should always choose a deductible that you’ll be comfortable paying.

2

How Does My Deductible Work?

The way deductibles work varies, based on whether you’re talking about auto policies or home policies.

Auto Insurance 

If you’re involved in a car accident and your vehicle can be repaired, your insurance company will pay the auto body shop for the damages, minus your deductible. You’ll then pay the auto body shop your deductible amount when your vehicle is completely repaired.

If you’re involved in an accident where your vehicle is totaled — that is, your insurer believes that the cost to repair your vehicle would be more than the value of the vehicle itself — your insurance provider will pay you the current value of your vehicle, minus your deductible.

For example, say you’re involved in a car accident and the damages are estimated to be $2,000 and you carry a $500 deductible. Your insurance company will pay the body shop $1,500, that is, the total damages minus your deductible, to repair your car. Once it’s fully repaired, you’ll then pay the body shop the $500 deductible to pick up your car.

Homeowners Insurance

Your insurance company will pay you directly for the damages of your loss, minus your deductible. You’ll then use that money to pay a contractor to repair your home. For example, say that you have experienced a kitchen fire, resulting in a $50,000 loss and you carry a $1,000 deductible. Your insurance company will pay you $49,000, the total damages minus your deductible. When the $50,000 in damages are repaired, you’ll pay for them using the $49,000 from the insurance company plus $1,000 of your own funds, which represents the deductible amount.

3

What Options Do I Have When It Comes to My Deductible and Filing a Claim?

You have the right to choose whether or not to file an insurance claim if you have a loss. Typically, people will file claims on larger losses and repair smaller losses on their own.

For example, say that you’re involved in an accident and the damage to your vehicle is $15,000 and you carry a $500 deductible. You would probably file a claim with your insurance provider to repair these damages. If so, you would pay the $500 deductible once it’s repaired.

Now imagine that the damages to your vehicle were only $200 and you have that same $500 deductible. In this case, you would probably choose to pay the $200 out of pocket to repair their car, rather than filing a claim with your insurer.

4

How Does My Deductible Affect My Premium?

Insurance policies have a wide range of deductibles you can choose from, based on the policy and coverage. In general, the higher your deductible, the lower your premium, and vice versa.

If you have a higher deductible, such as $500 or $1,000, your insurance company pays less to repair the damage, so the premium they charge you is lower. On the other hand, say you have a lower deductible, such as $100 or $300. With a lower deductible, you’ll pay less out of pocket if you have a loss and your insurance company will pay more, which causes you to have a higher premium.

5

How Can I Choose the Best Deductible Level for Me?

Some people may think it’s best to choose a higher deductible in order to pay a lower premium, yet you should consider what you’re comfortable paying if there were to be a loss. A $1,000 deductible will lower your premium, but you have to make sure you can afford to pay the $1,000 out of pocket if there is a loss. This is why your insurance provider will have a selection of deductibles that you can pick from, based on what you are able to pay if you were to file a claim.

6

Can Different Deductibles Apply to Different Coverages?

Deductibles can vary, based on policy type and on coverages — even within the same policy.

When it comes to auto insurance, you have a deductible for comprehensive coverage and for collision coverage. These two deductibles do not have to be the same. But whether they are the same or different, when you have a comprehensive loss — for example, fire, theft or vandalism — or a collision loss, your insurance provider will pay for the damages, minus your deductible. Then you’ll pay the deductible when your car is repaired.

When it comes to homeowner’s insurance, you have a base deductible for damages to your dwelling or personal property. You may also carry different deductibles for specific coverages, such as wind, hail or earthquake damage, depending on where you live.

7

Does My Insurer Offer Any Benefits or Discounts Specific to My Deductible?

Insurance providers may offer various benefits when it comes to your deductible, based on your driving history, claims history or if you’re not at fault.

Your deductible may go down for safe driving. Some insurance providers will reduce your deductible over time if you’re accident free. This may apply to your home insurance deductible as well, if you haven’t had any claims.

You may be eligible for a lower deductible. When you have a loss, some insurance providers may reduce your deductible if you use one of their recommended repair shops.

Your deductible may be waived. If you’re involved in an accident that isn’t your fault, your deductible may be waived, meaning that you won’t have to pay when you pick your vehicle up after it’s repaired.

Your insurer may apply one deductible across multiple policies. If you have a loss to more than one of your vehicles, or to both your auto and home, at the same time, some insurers may only require you to pay one deductible for the entire claim.

Choosing an insurance policy — and the right deductible level — isn’t easy. However, having the knowledge to make an informed decision can help make sure you select the deductible that’s right for your situation and your individual insurance policy.

Disclaimer: This material is for informational use only. Offerings may vary by insurance carrier. Speak with your agent or insurer for more details on your specific policy. Visit thehartford.com to learn more. If you specific questions about your policy with The Hartford, please call our Customer Service Department at 877-896-9320 and one of our representatives can assist you.

25 Responses to "Seven Things To Know About Insurance Deductibles"
    • Anna Hall | September 23, 2021 at 2:41 am

      Great article. Very helpful indeed to my insurance company in austin tx.

    • Robin | June 13, 2021 at 11:24 pm

      My homeowners insurance recently charged me my deductible twice, for two claims on some water damage, stating EVERY claim has a deductible-so either lump your claims into one or be prepared to dole out with each separate claim.

    • Irene Locke | June 13, 2021 at 6:51 am

      Very help info.

    • Luci Hansing | June 12, 2021 at 1:02 pm

      I THINK MY DEDUCTIBLE SHOULD HAVE BEEN TAKEN OFF ($1000.00) I DIDN’T RENT A CAR FROM YOU THAT YOU WOULD HAVE PROVIDED, I USED MY TRUCK AND IT GOT REAR ENDED BY TRYING TO SAVE YOU MONEY AND TIME I LOST TWO VEHICLES THE CHEV. SPARK AND THE FORD RANGER AND I AM SO SAD. PLUS I DON’T THINK YOUR PAYING A FAIR PRICE FOR THE SPARK BECAUSE IT WAS TOTALLED. I JUST WANTED YOU TO KNOW ALL OF THIS IS JUST NOT FAIR.
      RESPECTFULLY
      LUCILLE

      • Extra Mile Staff | June 14, 2021 at 7:48 am

        Luci – If you have specific questions about your policy with The Hartford, please call our Customer Service Department at 877-896-9320 and one of our representatives can assist you.

    • Lynda | June 12, 2021 at 12:15 pm

      When I spoke with Marsha on day of accident she said my deductible would be lowered by $100 Or even waived beings my clean record and the accident was not my fault. Forgot to mention to Dalia on Friday when we spoke , Also wanted to check on my policy amount am 65 year old woman with clean record and I maybe put 1000 miles on car in 2 years . Thank you for the evaluation
      Lynda

      • Extra Mile Staff | June 12, 2021 at 1:10 pm

        Lynda – If you have specific questions about your policy with The Hartford, please call our Customer Service Department at 877-896-9320 and one of our representatives can assist you.

    • Pam Patrom | June 12, 2021 at 12:12 pm

      I am amazed at the amount of important information you provide in these Extra Mile e-mails. I always love reading them and thank you. Keep up the good work!

      • Extra Mile Staff | June 12, 2021 at 1:05 pm

        Pam – That’s great to hear! Thanks for reading.

    • Alice Carroll | November 2, 2020 at 10:28 pm

      It’s nice to know that safe driving can help me have a better deductible when buying auto insurance. I’m considering to switch to a diesel car soon in order to save on fuel costs. Since I still drive a lot in order to buy medicine regularly, I think it will be best to still try to get a good coverage for my new auto insurance.

    • Ronald | December 23, 2019 at 12:54 am

      What happens when customer and Autobody shop verbally agrees that a customer not pay the insurance deductable then later threatens customer not to release the car unless the deductable is payed?

    • Frances Rhodes | August 12, 2019 at 6:35 pm

      I usually do not want to read these but I am glad that I did because it was just want I needed this morning and the information is vey valuable.

    • JOANNA HARRINGTON | August 10, 2019 at 9:25 pm

      Why is it that when you get a new car (with a 5 star safety rating ) your insurance often goes up because of replacement price, but as your car depreciates, your premium rate doesn’t go down?

    • Edgar Mauney | August 10, 2019 at 8:43 pm

      Why did my insurance premium increase when I reached 75 years old. It increased over $100.00 No claims and had insurance with AARP for At least 20 years.

      • Daniel Smith | June 12, 2021 at 11:03 am

        I have home and car insurance with Hartford. I would like to get my. Deductible lowered. I had roof problems this past year and the total cost was 15,ooo.00. Insurance paid only less than 2000.00 against claim. I have had this insurance more than 20 years. I feel something is wrong.. please contact or give me reason not to look for another policy elsewhere. Thank you. Daniel

      • Extra Mile Staff | June 12, 2021 at 1:16 pm

        Daniel – Thanks for reading. Please give us a call at 860-547-5000 to discuss your specific policy questions.

    • Rhonda Gilliard | August 10, 2019 at 3:54 pm

      You explained it in such a simple format I really understand now. Thanks a Bunch!

      • Extra Mile Staff | August 12, 2019 at 6:10 pm

        You are welcome, Rhonda. Glad we answered all your questions about deductibles.

    • SHELBY R LEON | August 10, 2019 at 3:52 pm

      One marketing strategy ins. companies can utilize to increase retention is to waive the deductible for long time customers, let’s say 10 years from the original year of inception.

    • orville sheridan | August 10, 2019 at 2:46 pm

      we have a 2000 tundra and 2003 solara.,should we stop deductable?

      • Extra Mile Staff | August 14, 2019 at 12:36 pm

        Hi Orville, please call our Customer Service Department at 877-896-9320 and one of our representatives can review your policy with you. Thank you!

    • Albert miller | August 10, 2019 at 2:21 pm

      We only put on about 2 to 3000 a year does that make any difference. Other insurance companies said we could save with them?but your company is good. Thanks.

      • Extra Mile Staff | August 14, 2019 at 12:37 pm

        Hi Albert, please call our Customer Service Department at 877-896-9320 and one of our representatives can review your policy with you. Thank you!

    • Laura Springer | March 29, 2018 at 1:27 am

      Very simple explanation. Great article!

      • milt bulson | June 11, 2021 at 5:25 am

        vary helpful thank you

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