California car insurance is something everyone in the state must have, but how do you decide what kind of coverage you need and how much of it is enough?
There’s also so much unfamiliar terminology, like “at-fault,” “liability,” and “deductible.” It’s hard to know if you’re getting a good deal and whether or not you’re covered if you get into an accident.
What is a Deductible?
Deductible refers to the amount you need to pay before your collision or comprehensive coverage will pay for any damages to your vehicle. For instance, if you rear-end someone and you have $3,000 in damage to your car, and your deductible is $1,000, you will pay $1,000, and the insurance company will pay the other $2,000.
For damage that is less than your deductible, you will pay all of the cost yourself. Each incident is counted separately, so if you have three different minor accidents with $900 in damages in each accident, you will pay that $900 three times because each incident was less than your deductible.
Keep in mind that you only have a deductible on your policy if you carry collision and comprehensive coverage on your car. If you own your car and aren’t financing it, you can choose not to have collision and comprehensive coverage. However, the insurance company will not pay for any damage to your car if you have an accident. If damages occur, you may have to pay for all of the repairs and/or replacement costs yourself.
How to Choose Your Deductible
Most collision and comprehensive insurance have a deductible, which can range from $100 to several thousand dollars. The higher your deductible, the lower your rate will be. Of course, you want to pay as little as possible out-of-pocket if your car is damaged or destroyed, but you may not be able to afford the monthly payment that comes with a very low deductible.
Wanting a rock-bottom monthly car insurance payment may tempt you into carrying a deductible of several thousand dollars, but that may not be such a great idea. If your car sustains several thousand dollars worth of damage or is totaled and needs replacing, would you be able to afford that out-of-pocket cost? If not, you may need to pay a little more each month to get the coverage you need.
Most people choose a deductible of $500 or $1000 because they know they can afford to pay that much if their car is damaged. Sometimes, you can carry one deductible for your collision coverage ($500, for instance) and a different deductible on your comprehensive coverage (such as $100).
Other Deductible Considerations
If you can afford to replace your vehicle without the help of insurance, you probably want to drop your collision and comprehensive coverage altogether and just carry liability coverage. If your car is older and isn’t worth more than the deductible, you will likely be better off not carrying collision or comprehensive coverage.
If you are involved in an accident or incident that is found to be someone else’s fault, their insurance may pay for the damage to your car. In this scenario, your insurance company may apply to get your deductible amount from the other insurance company and, if successful, may refund it to back to you.
The best tip for choosing the right California car insurance is to compare multiple quotes. AIS Insurance can provide you with several quotes right away so you can easily compare one company to another before making a sound decision. Get your quotes today.
The information in this article was obtained from various sources. This content is offered for educational purposes only and does not represent contractual agreements, nor is it intended to replace manuals or instructions provided by the manufacturer or the advice of a qualified professional. The definitions, terms and coverage in a given policy may be different than those suggested here and such policy will be governed by the language contained therein. No warranty or appropriateness for a specific purpose is expressed or implied.