When discussing cars, who better to quote than Henry Ford? He once quipped, “I cannot discover that anyone knows enough to say definitely what is and what is not possible.” Absolutely true and what a great endorsement for car insurance!
Even careful drivers suffer damage to their cars from collisions, weather, animals, and vandals. This is when it helps to have a car insurance policy with collision and comprehensive coverage. Damage to your car is covered by the collision portion if you hit something (car, tree, guardrail, etc.) or by the comprehensive provision if the damage results from something else, like fire, hail damage, or hitting a deer.
When an insurance company “covers” damages, however, that doesn’t mean they pay the entire cost to repair or replace your vehicle. Typically speaking, your insurance company will pay for damages up to the dollar limit of the policy (if applicable) less the deductible. The amount of the deductible varies and is inversely related to the premium amount you will pay. In other words, lower-deductible policies have higher premiums and higher-deductible policies have a lower premium.
Some examples:
Suppose some road debris such as a small rock is thrown-up by the car in front of you and hits and shatters your windshield. To replace the windshield will cost $1000. Many insurance companies will waive the deductible if the windshield can be repaired instead of replaced. But you are not so lucky and choose to make a claim under the comprehensive portion of your policy.
- If you have a $250-deductible policy, then you will pay $250 and the insurance company will pay the remainder, $750.
- If you have a $500-deductible policy, then you will pay $500 and the insurance company, $500.
Perhaps you are momentarily distracted and you rear-end a car stopped at a stoplight. The damage to your car is $5000. If you make a claim under the collision portion of your policy, the insurance company will pay $4750 (if you have a $250-deductible policy) or $4500 (if you have a $500-deductible policy).
These are illustrative examples only; the cost of your car repair will depend on the make and model of your car and the extent of the damage. The type of policy and deductible appropriate for one person may not be the best choice for another. When you’re choosing a deductible for your car insurance, you can rely on the folks at Reis to help you choose the coverage and deductibles that are appropriate for you. They have been in business since 1974 thus have lots of experience assessing risk, answering your questions, and helping clients make good decisions.
Nobody knows what is possible or what tomorrow will bring, but you can control your financial exposure by transferring risk to an insurance company. Call us at 715-425-6721 to set up a consultation. Or stop by our office located at 220 S. Main Street in River Falls, WI.
