Published: July 2016
A deductible is the amount you agree to pay out of pocket before your insurance benefits help cover a loss. You typically set the amount of your deductible at the time you purchase your insurance. Understanding how deductibles work may be a step in helping you choose the policy that fits your needs.
Watch the video below to hear Allstate agency owner George Denger talk about what deductibles are and give an example of how they work. He explains some of the issues you may wish to consider before choosing your deductibles.
(Voiceover): I'm George Denger, and I'm an Allstate agency owner with offices in Easton and Stockertown, Pennsylvania. I get a lot of questions from customers about what a deductible is and how it works.
A deductible is the amount you pay out of pocket when your insurance pays a claim. You select your deductible when you purchase insurance.
Here's how deductibles work. Say the deductible on your auto comprehensive coverage is $500. A big tree branch falls on your car, and the damage costs $2,000 to fix. You would then pay $500 toward the repairs, and your insurance would pay the other $1,500.
The right deductible can be different for everybody. I live in rural Pennsylvania, where there are a lot of deer. Most people in my area know someone who has hit a deer.
Sometimes when a customer hits a deer, they say, "I didn't do anything wrong, the deer jumped out in front of me! Why should I have to pay a deductible?" But a deductible isn't based on fault. It's based on what you what you agree to pay when you purchase your insurance policy.
Because of the risk of deer in our area, I suggest that car insurance customers think about a lower deductible on their comprehensive coverage. Even if it means paying a bit extra in premiums.
Understanding how deductibles work can help you tailor your insurance coverage to suit your needs.