Texas Auto Insurance: Understanding Car Insurance Deductibles

A car insurance deductible is the amount of money you have to pay out of pocket before the insurance company will pay the for the rest of the claim, subject to the policy limits. Texas auto insurance has both high and low deductible options. It’s important to understand how your deductible will be resolved in the claim process.

 

Almost all Texas auto insurance policies have a deductible. The most common coverage that is subject to a deductible is comprehensive and collision coverage on your vehicle.

Texas Auto Insurance Deductible Options

Collector car insurance has a $0 deductible option. However, this type of insurance is reserved for antique and collectible vehicles. You can learn more about collector car insurance here.

Conventional Texas auto insurance offers deductibles as low as $100 and as high as $2000. The higher the deductible you carry, the less your insurance premium will be. You are assuming more of the risk. The lower the deductible, the higher your insurance premium will be. The insurance company is assuming more of the risk.

How Do You Pay Your Deductible?

The insurance company and your repair shop of choice will need to agree on the cost to repair. For example, let’s say your vehicle undergoes a $5,000 hail loss. Both the shop and insurance company agree that it will cost $5,000 to repair your vehicle.

For the sake of the example, let’s also say that you are carrying a $1,000 deductible for comprehensive coverage.

Turpen & Associates: Texas Auto Insurance: Understanding Car Insurance Deductibles

The insurance company will send you a check in the amount of $4,000 and it will then be your responsibility to compensate the shop for the $1,000 remaining due (your deductible).

It’s common to misunderstand and believe that you pay the Texas auto insurance company the deducible. We hope this clears it up. You owe the shop, not the insurance company. It’s also not uncommon for shops to allow payment plans for paying out the deductible.

Choosing Your Texas Auto Insurance Deductible

If you are financing your vehicle, then your lender will likely have requirements as to what deducible you must carry. For example, we see a lot of lenders require at least a $500 deductible, and some even require a $250 deductible. Make sure you are within your lender’s requirements.

If you are not financing but still wish to have physical damage coverage for your vehicle, then you have more to think about than just a lender’s deductible requirement.

Turpen & Associates: Texas Auto Insurance: Understanding Car Insurance Deductibles

The deductible is your responsibility in a covered loss. It would be wise to consider your budget and what you can afford at the time of a future loss. Can you afford to pay a $2,000 deductible? If not, opt for a lower deductible.

Another aspect to consider is your Texas auto insurance premium budget. The deductible you choose directly correlates to the amount of premium you pay to the insurance company. Can you afford a higher insurance payment? If so, you could opt for a lower deductible.

The third thing to consider is how you would like to use your Texas auto insurance for future losses. Are you the type of person that never files claims and wishes to keep it that way? If so, you can benefit from carrying a larger deductible for the bigger, more catastrophic losses.

If you’re looking to use your insurance for every loss, even the little ones, then you may want a lower deductible. Although, we do not recommend this practice.

Consult With Your Agent

Ultimately, if you’re not sure which deductible is right for you, then have the discussion with your Texas auto insurance agent. That’s what we’re here for. Call us today for more information on how to choose your deductible while maximizing savings.

 

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