Many of you have been in a car accident, taken your vehicle to a repair facility, and, upon picking it up, been told you owe the shop money. You have the check from your insurance company, so you hand it to the front desk employee—only for them to ask for an additional amount. You thought the insurance check covered all expenses, right? So, what is this extra charge, and why is it your responsibility?
What Is a Deductible?
Many customers come into our shop confused when they see a remaining balance, which can range from $250 to $5,000. The common questions we hear are:
- “What is this for?”
- “Why do I owe money after my insurance already paid for my repair?”
- “When will you submit this cost to my insurance so they can cover it?”
This remaining balance is called the deductible.
A deductible is the amount of money you must pay before your insurance company starts covering expenses. Deductibles are a key feature of many types of insurance, including auto, health, homeowners, and renters’ insurance. On the other hand, an insurance premium is the amount you pay for coverage—whether monthly or yearly. The amount of your premium is influenced by the deductible you choose when purchasing your policy.
When selecting your auto insurance, you typically have two options:
- A lower deductible with higher monthly premiums
- A higher deductible with lower monthly premiums
Choosing a lower premium might seem like the best financial decision, but it can leave you with a larger out-of-pocket expense when you file a claim.
How Does Your Deductible Affect Repairs?
Let’s say you receive an estimate from a repair facility totaling $5,000. If your policy includes a $1,000 deductible, the insurance company will deduct that amount before sending payment to the repair shop. That means the repair shop receives $4,000 from the insurance company, and you’re responsible for paying the remaining $1,000 when you pick up your vehicle.
Accidents can happen at any time—a tire blowout on the highway, sun glare blinding your vision at an intersection, or an unexpected collision. Since we can’t predict when we’ll need repairs, it’s important to choose a deductible amount that fits within our budget.
Next time you renew your auto insurance, take a moment to ask:
- How much is my deductible?
- Am I financially prepared to pay that amount if I need repairs?
Understanding your deductible now can help you avoid surprises later and ensure you’re ready for any unexpected repairs.