Everything You Need To Know About Deductibles
In our previous discussion, we looked at lease insurance from a broad perspective. From here on out, we are going to into deeper detail into each issue you need to be aware of before securing your lease.
First, a quick refresher, in every case of lease insurance you will be dealing with deductibles. A deductible is a payment you must make that is not covered by insurance. Always remember that deductibles will be coming out of your pocket and is the part of the transaction that’s not covered by insurance.
In most cases, your deductible varies depending on how much you’re paying monthly for insurance. Usually, your insurance option will come in 3 tiers. The more expensive tier you choose the lower your deductible will be. It’s a balance of risk vs. reward where the decision is up to you to make.
For car leases specifically, you may not have many options as far as what your deductible will be. On average you should expect something less than $500 a month. However, if you have issues regarding your driving record you may be forced to buy a more comprehensive plan.
Deductibles are typically selected with comprehensive coverage, collision coverage, and auto loan/lease (gap) coverage. In some cases, you’ll also choose a deductible on personal injury protection coverage and on uninsured/underinsured motorist coverage.
How They Work
Accidents happen and sometimes they’re your fault. When you cause a collision, initial repairs will be covered by your deductible. Whatever is left will be covered by your insurer. For example, if you do $1,000 worth of damage to your vehicle then your $500 deductible will cover half the cost. The insurer will pick up the rest as long as your car is worth more than the damage.
In the case where the accident is not your fault, there is a process called subrogation that gives you back your deductible even if you already paid for the repairs. After an accident, the first thing you want to do is document everything. The faster you can prove fault the better your chances you have to keep your deductible.
Because of this process, there’s no real reason to wait to get your car fixed. If you pay your deductible that is not an admission of guilt. Get your car fixed then do as much as you can to push the insurance process along as fast as possible.
Your comprehensive coverage may have a caveat for glass damage. If your windshield or window breaks, you may not need to pay a deductible for us to help you get it fixed.
Because vehicle theft falls under the umbrella of comprehensive coverage, you’ll need to pay your deductible to get a cash settlement when the car isn’t found. The value of the car at the time of the theft, or what we call its actual cash value, will be the amount of your settlement (minus deductible). This way you can buy a new or used car of roughly the same value.
If your stolen car is found and there’s damage, comprehensive can help cover the cost of repairs, and you’ll pay your deductible as you normally would.
Uninsured and at-fault drivers
When you add collision coverage to your policy, a collision deductible waiver allows you to skip the deductible when you’re struck by an uninsured driver. If the deductible waivers available, it’s also required when you add the coverage to your policy.