Deductibles and Coverage limits in Auto Insurance Policy

Deductibles

A deductible is the amount of money you agree to pay to help repair or replace your car if you have a claimed covered by your policy.

Example: A driver damages his car in an accident and it will cost $5,000 to repair.



Choosing a higher deductible means you might pay less for your insurance premium now, but you should be prepared to pay more out of your pocket later if you have an accident.


Coverage Limits

Each coverage has a limit. If you have an accident claim covered by your policy, insurance company will agree to pay for damages up to that coverage's limit.

Example: A driver causes an accident in which someone is injured. The case goes to trial and there is a verdict to compensate the injured person with $57,000.

Choosing a higher limit means you might pay more for your insurance premium now, but it could help protect you from having to pay other people's expenses later.



Source: www.allstate.com
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