Do I always have to pay a deductible?

Usually you do have to pay as most claims have a deductible. The deductible is the amount that you share with the insurance company in the loss. If you have an automobile claim for $5000 and your deductible is $500 then the insurance company will pay the repair garage $4500 and you will pay the difference.

If your automobile claim is for the loss of the entire vehicle to fire or theft then the deductible may not apply. Check your policy for the endorsement SEF 40.

Deductibles can be tool to help reduce the overall cost of insurance. If you choose a higher deductible then the premium for your automobile or home insurance will go down. It is important to weigh this risk for your particular situation. This is best discussed with your agent or broker who can calculate the savings for you.

Some insurance companies offer a declining deductible. The more years you go claims free the lower your deductible is on a claim when it does occur. Most insurance companies waive the deductible on very large property claims.

For a business that has had a problem with claims frequency then a high deductible is often the result. In this situation the high deductible will not necessarily reduce the overall premium. The high deductible is part of the insurance company's agreement to provide the coverage. For certain types of business which have a higher chance of a claim occurring, even when there has not been a claim in the past, you will also see higher deductibles.

For commercial automobile the deductible may reflect 5% of the manufacturer's suggested new retail price (MSRP) of the vehicle. If the vehicle is in a classification where this is invoked then the deductible cannot be lowered. This is commonly seen with long haul trucks or very heavy trucks.

You often hear that increasing your deductible is a smart way to save money on insurance. It can be. Review your choices with your agent or broker.

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