Choose your car insurance deductibles and coverages well

We want car insurance to fit into our budget. But beyond that, many of us still ask ourselves, "What auto insurance should I get?" The key is knowing what deductibles and coverages are and how they affect auto insurance so that you can personalize your coverage to fit your needs and budget.

What is a deductible in car insurance?

Put simply, a deductible is the amount that you agree to pay up front for a covered insurance claim. You often see deductibles on collision and comprehensive coverages, although there are other coverages that have deductibles depending on the coverages available in your state.

For example, if you have a covered loss and the cost to repair your car is $2,000 and your policy has a $500 deductible, you will be responsible for the first $500 and the remaining $1,500 is paid by your insurer.

How do car insurance deductibles work?

When purchasing your car insurance policy, you get to select a deductible. The deductible applies each time you file a claim. According to Kelley Blue Book, the most common deductible is $500. When choosing your car insurance deductible, think about how much you're willing to pay out of pocket if you have a covered loss. Weigh that against the fact that higher deductibles generally mean lower premiums, but higher out of pocket costs. And lower deductibles generally translate to higher premiums. It really comes down to your financial situation and what makes you the most comfortable. You can ask your insurance agent to run quotes with different deductibles so that you can compare and make the best choice for you.

Auto insurance policies generally consist of several kinds of coverages. Because insurance laws vary from state to state, the following information is here to give you a broad overview of typical coverages, and it isn't a statement of contract.

When do you pay your car insurance deductible?

Your deductible may apply when you use your policy for a covered claim, typically at the time of repair of your damaged vehicle. If you were involved in an accident and another party was found at fault, you may be able to go through their insurance company for your repairs with no deductible incurred.

What car insurance should I consider?

Unfortunately, there's no black and white answer to what car insurance you may need. It depends a lot on what coverages you need and the amount of deductible or policy limits you feel comfortable with. The State Farm® Personal Price Plan® helps you create an affordable price (just for you) or you may contact a State Farm agent today to find out what's right for you.^{footnote 1}

Types of insurance coverage

Auto liability

Auto liability insurance coverage is required in most states and limits are selected by the insured. Liability coverage helps protect you if you are found to be at fault for an accident and helps pay for damages to other people or their property. Assess how much you can afford to pay out of pocket if damages exceed your coverage limits. The higher your liability coverage limits, the more damages your policy can cover. A liability deductible is not required.

Auto liability coverage falls into two categories:

• Bodily injury liability — medical expenses, pain and suffering, lost wages and other special damages
• Property damage liability — damaged property and may include loss of use

Liability coverage can also help pay legal defense and court costs. State laws usually dictate the minimum amounts of insurance required, but higher amounts are available.

Personal Injury Protection (PIP)

This coverage is only available in certain states. Regardless of who is at fault for an accident, this coverage typically helps pay for reasonable and necessary medical expenses for covered parties for treatment caused by an auto crash, including being struck by a car as a pedestrian. It may also pay for:

• Rehabilitation
• Lost earnings
• Replacement of services (e.g., childcare if a parent is disabled)
• Funeral expenses

Medical Payments Coverage (MPC)

This coverage is available in many states. Regardless of who is at fault for an accident, this coverage typically helps pay for necessary medical and funeral expenses for those covered when the expenses are caused by an auto crash, including being struck by a car as a pedestrian. Medical payments coverage varies by state and specific policy. Medical payments coverage does not require a deductible.

Collision

Collision coverage helps pay for loss or damage from a crash to a covered vehicle caused by the following and usually requires a deductible:

• Collision with another vehicle
• Collision with an object

Comprehensive

This coverage helps pay for loss of or damage to a covered vehicle that is not caused by a collision or vehicle rollover. Examples of this type of damage or loss include:

• Fire
• Wind
• Hail
• Flood
• Vandalism
• Theft
• Hitting an animal

Comprehensive coverage on your auto insurance usually requires a deductible but you may be able to elect no deductible.

Uninsured motorist

This coverage helps pay for damages if you or another covered person is injured in an auto crash or struck as a pedestrian caused by a driver who does not have liability insurance. In some states, it may also pay for property damage. The coverage varies by state and depends upon policy provisions. This coverage does not typically require a deductible. Uninsured motorist coverage is subject to a policy limit chosen by the insured.

Underinsured motorist

This coverage helps pay for damages if you or another covered person is injured in an auto crash or struck as a pedestrian caused by another driver who is considered to be underinsured as defined by the policy. It varies by state and depends upon policy provisions. Underinsured motorist coverage is subject to a policy limit chosen by the insured.

Rental reimbursement

This coverage helps pay for rental expenses if your car is disabled due to a covered loss. Daily allowances are based on the coverage you select.

Emergency roadside service

Roadside assistance coverage helps pay for roadside assistance such as having your auto towed due to a breakdown or getting back into your locked car.

Rideshare driver coverage

This coverage extends your existing coverage from your personal auto policy to help cover you when you use your personal vehicle to drive for a rideshare company such as Lyft or Uber. Coverage varies by state and some state-specific requirements may apply.

There are many different types of coverage options with various deductibles and premiums. Contact your local insurance agent for the most current quotes and information for your needs.