What is an insurance deductible?
A deductible is a portion of the amount paid by the person responsible for the loss. All insurance companies require the insurance holders to pay deductibles for several reasons, the most important, one being to hold them responsible for some part of the loss.
How does it work?
Mo had been in a car accident and the car damages in total came out to be $8000. When he bought the insurance policy from the AZ Insurance Team, Mo decided to choose his deductible amount as $500. In this case Mo would only be required to pay the deductible amount and the insurance company would cover the rest.
How to make a smart deductible decision?
It is important to find the right deductible amount for your insurance policy, there are two main things to consider:
1.Your personal income
2.Long term financial benefit
Tim and Cody decided to go to AZ insurance Team to get their auto insurance. Let us assume Tim’s yearly income is approximately $200,000 whereas Cody makes $50,000 a year.
A smart financial decision for Tim would be to have a higher deductible, such as $1500, because the higher the deductible, the lower the insurance premium.
Cody on the other hand should opt for deductible as low as $500, because if he went for a higher deductible and crashed his car, he would be liable to pay much more than he can afford.
Independent insurance brokerage located in Tempe, AZ. We offer auto insurance, homeowners insurance, life insurance, renters insurance, commercial insurance…