A $500 deductible on car insurance means you agree to pay the first $500 of any covered repairs resulting from a claim before your insurance company begins to provide coverage.
Here’s a breakdown of what a $500 car insurance deductible means:
The Basics
- Deductible: The amount of money you agree to pay out-of-pocket before your insurance coverage kicks in to pay for damages.
- $500 Deductible: This means if you have an accident, you’ll be responsible for paying the first $500 towards the cost of repairs. After that, your insurance company will cover the remaining eligible expenses.
Example
- You get into a fender bender that causes $3,000 in damage to your car.
- You have a $500 deductible on your collision coverage.
- You pay: $500
- Your insurance company pays: $2,500
Important Things to Remember
- Deductibles usually apply per claim: Each time you get into an accident and file a claim, you’ll need to pay the deductible amount.
- Deductibles affect your premiums: A higher deductible usually means lower monthly insurance premiums (you pay less to the insurance company). A lower deductible generally means higher premiums.
- Deductibles typically apply to collision and comprehensive coverage: These coverages protect your own vehicle from accidents or events like theft, fire, or vandalism. They might not apply to liability insurance that covers damage you cause to others.
Choosing a Deductible
Selecting the right deductible is a matter of balancing:
- Monthly Costs: Can you afford a higher monthly payment for the insurance policy in exchange for a lower deductible?
- Risk Tolerance: Are you comfortable paying a larger amount out-of-pocket if an accident occurs?
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