How do deductibles work?
If you have an insurance policy then chances are you’ve likely heard the term deductible, but do you know what it means and how it works? Allow our Santa Monica insurance center to explain!
What is a Deductible?
A key feature of many types of insurance coverage, a deductible is the amount of money a policyholder must pay out-of-pocket before your insurance will help pay for a covered claim. There are generally two types of deductibles – a dollar-amount and a percentage based one – which differ in how your deductible is calculated. Santa Monica policyholders will typically find deductibles for certain coverages in a wide range of Allstate insurance products, such as homeowner’s, auto, and renters insurance policies.
How Do Deductibles Work?
Confused about how deductibles work? Let’s take a look at an example! If you have a $500 deductible and rack up $3,000 in vehicle damages after a covered accident, you will likely pay $500 before your insurance policy kicks in and covers the remaining $2,500. Unlike health insurance where you typically meet one deductible per the calendar year, a deductible for an auto or homeowner’s insurance policy will apply each time you file a claim.
Does A Deductible Affect the Cost of Your Santa Monica Insurance?
Your deductible has a substantial impact on the cost of your premium, or the cost you pay for your particular insurance policy. Generally, the greater your deductible, the lower your premium will likely be. This is because you will take on greater responsibility for the expenses of a claim with a higher deductible. While many recommend increasing your insurance deductible as high as you can reasonably afford to lower your rates, it should not be done so at the cost of financial stress.
Don’t hesitate to contact us at Sully Insurance Center to request an Allstate insurance quote or to speak to one of our expert Allstate agents regarding what deductibles may be in effect for your insurance policies. Together, we can help you find the perfect balance of deductibles and premium costs for your budget.