What is a Car Insurance Deductible?

Posted: Friday, May 27th, 2016

Before you shop for your next car online, or apply for your auto loan, you’ll want to understand your car insurance deductible. Most states require auto insurance, and everyone should have it. If you’ve never purchased auto insurance before, then you might not be familiar with all of the vocabulary that the industry uses. We’re here to help you understand what a deductible is.

What is an Insurance Deductible?

An insurance deductible is one of the most important components of any car insurance plan. The lower the deductible the better. Your deductible is the amount that you will pay any time you make a claim on the insurance company. Generally, you’ll be able to pick a plan with a certain deductible, and the lower the deductible, the higher the premium, or amount you’ll pay for insurance. Likewise, the lower the premium the higher the deductible.

In other words, a deductible will work like this:

  1. You have a fender bender and need a repair.
  2. You report incident to your insurance company.
  3. You have the repair done and it costs $500.
  4. Since you have a $300 deductible, your insurance company reimburses you $200 to cover the cost of the repair.

You can see why a lower deductible would be better! In this situation, if you only had a $100 deductible, you would have received $400 back!

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If you’re in the market for your next car, you can contact Green Light Auto Credit online now or call our team of finance experts at (800) 200-5551 with any questions about your car insurance deductible. We’re happy to help you secure the auto loan that you need to drive home in your next car today.

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