All auto insurance policies have a deductible. Before selecting a deductible, it is important for you to consider a few things. This overview of MA auto insurance deductibles may help.
What Is a Deductible
Deductibles are what you must pay out-of-pocket before the auto insurance coverage kicks in. It applies per claim. For example, if damages to your car result in $3,000 worth of damage and your deductible is $1,000, then you must pay $1,000 and your MA auto insurance company will pay the remaining $2,000.
Deductibles and Insurance Premiums
The higher the deductible, the lower the insurance premium. So, a $1,000 deductible will result in lower insurance cost than a $500 deductible. However, this doesn’t mean you should always go for the lowest premium. Think about whether that deductible will create any hardship. If you cannot afford to pay $1,000 out of pocket, then it’s best to go with the lower one. The added cost to your insurance premium is minimal in comparison. Some insurance companies offer deductibles as low as $100.
Restrictions on MA Auto Insurance Deductibles
If you have a car loan, your lender may require your deductible to remain under a certain amount. For example, some require a deductible of $500 or less. Why do they do this? Well, because the car is collateral on your loan, they want to make sure that necessary repairs are made. If you have a high deductible and cannot pay it to get your car repaired, then the car is worth less. The lender’s investment is at risk when your car is in disrepair. For this reason, they want lower deductibles that you are more likely to afford.
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