What is a Deductible?

Anyone who’s been in one knows that getting into an automobile accident is confusing and scary. There’s the terrifying initial collision, the surprise, the worry am I OK? And, once you’ve had a moment to compose yourself, How much is this going to cost? Even in minor traffic accidents, the costs can add up fast. Bodywork, realignment, repainting, and all the other little corrections that go along with fixing your car can add up fast, and you may not know off-hand how much your policy will cover.

The two numbers you need to be aware of in your insurance policy are the premium and the deductible. The premium is the amount charged by your insurance carrier for coverage – that is, the amount you pay them for insurance. The deductible is the amount of damage costs that the insurance company does not provide; that is, the amount of money you have to pay towards covering the damage before the insurance company will pay its share.

Normally, the deductible is a fixed cost (like $500, or $750) which you are required to pay up front before you get the benefits of the insurance. The general rule is that the higher the premium, the lower the deductible, and vice versa. So if you are in an accident the total cost of which is $3000 and you have a deductible of $500, the insurance company will pay $2500 of the repair costs. If you have a $1000 deductible, the company will only pay $2000 of the repair costs. However, your monthly premium will be considerably lower with the $1000-deductible policy.

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Insure on the Spot makes shopping for Chicago auto insurance easy and efficient. We can find the policy that will best meet your individual needs. Contact us today at 773-202-5060.