Insurance deductibles are a common feature of many insurance policies , but what exactly are they and how do they work? Let's break it down.

A deductible is the amount of money you agree to pay out of pocket before your insurance coverage kicks in. For example, if you have a $500 deductible on your auto insurance policy and you get into an accident causing $2,000 in damage, you would pay the first $500, and your insurance company would cover the remaining $1,500.

Deductibles serve a few purposes. Firstly, they help keep insurance premiums affordable by shifting some of the financial responsibility to the policyholder. Secondly, they discourage frivolous claims by ensuring that policyholders have some skin in the game.

Insurance policies often have different deductibles for different types of coverage. For example, your auto insurance policy might have a separate deductible for collision coverage and comprehensive coverage. It's essential to understand the deductibles associated with each type of coverage in your policy.

Choosing the right deductible can be a balancing act. Opting for a higher deductible typically results in lower premiums but means you'll pay more out of pocket in the event of a claim. Conversely, a lower deductible means higher premiums but less financial burden upfront.

When deciding on a deductible, consider your financial situation and risk tolerance. Are you comfortable paying more out of pocket to save on premiums , or would you prefer lower out-of-pocket costs at the expense of higher premiums?

In summary, insurance deductibles are the amount you agree to pay before your insurance coverage kicks in. Understanding how deductibles work and choosing the right deductible for your needs can help you make informed decisions about your insurance coverage.

Curious what your deductibles are or interested in discussing them with us? Reach out to Ben Freeman at Riseson Insurance in Tempe , Arizona.