Everything You Need to Know About Deductibles

What exactly are deductibles?

Are you wondering, “What is a deductible?” but are too embarrassed to ask because you feel like it is a silly question? No silly questions here. Better yet, we’ are going to spell it out for you before you even have to ask the question. It really is important to know what deductibles are because they are common with most any insurance policy.

A deductible is the amount of money a person must pay before an insurance company will pay the benefits specified by your insurance policy. This amount varies depending on the policy you choose.

How it works

The process typically goes something like this:

1. You you file a claim.
2. The insurance company will subtract the deductible amount you have chosen from the total cost of the claim.
3. You will pay out of pocket the deductible amount to cover the loss or damage and the insurance company will cover the rest up to the policy limits.


Let’s say you wreck your car and the damages are estimated to be $3500.00. Your deductible is $500.00. You file the claim for the full amount and the insurance company will send you a check less the deductible for $3000.00.

Typically, higher deductibles equal a lower monthly premium rate and lower deductibles equal a higher monthly premium rate. It is wise to choose a policy with a deductible somewhere in the middle to keep the monthly premium affordable but also so your bank account won’t be drained in the event of an accident.

Still have questions? We’ll be happy to talk you through the ins and outs of a deductibles on your policies especially auto insurance and home insurance. Don’t hesitate to ask our agents.