One of the most common terms you’ll hear when discussing car insurance is the deductible, which is how much an insured motorist must pay out of pocket before coverage kicks in. This amount directly impacts how much a driver will pay for their premium and related expenses. It is for that reason that Colorado drivers must know how deductibles work, as well as the options they have.
In the following post, the team at Warrior Insurance & Services Group looks closer at the potential deductibles for a Colorado car insurance policy and how they can affect the conditions of a resident’s auto coverage.
How Does a Car Insurance Deductible Work?
When you file a claim with your car insurance company, you must pay the full amount of your deductible before the company pays out the remainder of your claim. For example, say you have collision coverage with a $500 deductible. You hit a deer, and the accident caused $2,500 in damage to your vehicle. If your claim is approved, you’d pay out the $500 first, and the insurer would pay for the remaining $2,000.
Note that car insurance deductibles typically cover collision and comprehensive damages, but not liability. If you’re at fault for injuries or property damage to another party, you’ll need another policy to extend liability coverage.
How Deductibles Affect Premiums
The deductible amount you choose has an inverse effect on the premium your car insurance provider charges you. If you opt for a higher deductible, your premium will be lower; if you need a lower deductible, your premium will increase. Choosing the right deductible is a matter of balancing what you can afford with what you’re willing to risk.
Keep in mind that most car insurance deductibles apply per claim, which differs from the annual aggregate deductibles commonly found in health insurance policies. If your deductible is $500, you’ll have to pay $500 on each claim.
Common Deductible Amounts in Colorado Car Insurance
The most common deductible amount in Colorado car insurance is $500, though some insurers may offer deductibles of $250, $1,000, or $2,000.
Several factors may impact the deductible amount you choose, such as your age, driving record, claims history, credit score, vehicle value, and other personal details, such as your job or marital status. City drivers face greater accident risks than those in less populated rural or suburban areas, so their premiums are generally higher, but that, in turn, affects their deductibles.
Additionally, the State of Colorado requires drivers to carry liability insurance, which covers harm or damage they might cause to others or their property in an accident. However, the state does not mandate coverage for damage to the driver’s own vehicle, such as repair costs after an accident. If a vehicle has an active loan, the lender will typically require full coverage, including collision and comprehensive insurance, to protect their financial interest. Understanding these distinctions is crucial when selecting a policy and deductible limits to meet both legal and personal needs.
Explore Deductibles With Warrior Insurance & Services Group
When you’re considering changing your car insurance deductible – especially at policy renewal time – think seriously about your financial status and your vehicle’s age and condition. Your claims history and overall risk may have a big effect on the deductible you need.
If you need assistance navigating the ins and outs of car insurance deductibles, Warrior Insurance & Services Group can help. We provide comprehensive coverage to Colorado drivers with different histories and financial needs, and our agents can guide you through all the policy points and determine the deductible amount that best suits your needs. Get a quote today by contacting us online.