Limits and Deductibles

Finding the right insurance policy for you and your family is about more than what types of coverage you’ll need. Equally important is the monetary extent of your coverage and how much you’ll be paying out-of-pocket in the event of an accident. These two factors, referred to as limits and deductibles, also affect your premium, or the actual amount you pay for your policy. 

Limits

A coverage limit is the maximum amount that your policy provider will pay if a collision or other sort of damage occurs. In general, the higher your coverage limit is, the higher your premium will be, since the insurance company is taking a greater risk in insuring you to that amount. Remember, limits apply only to claims that can be determined to fall within the bounds of your policy, so it is vital that you understand what is covered by your specific policy before agreeing to a limit amount.

Deductibles

 A deductible is the dollar amount that you agree to pay out-of-pocket before your insurance coverage kicks in. For example, if your deductible is $300 and the damage to your car is $700, your insurance would cover the remaining $400. Like limits, deductibles have a significant impact on your insurance premiums, with higher deductibles usually reducing what your coverage costs and lower deductibles increasing it. Therefore, while you might be paying less every period if your deductible is $500, the same $700-worth of damage would only be compensated with $200 by the policy provider.

Deductibles also apply only to certain types of insurance, such as comprehensive and collision coverage. Uninsured and underinsured motorist coverage usually does not require any evaluation of a deductible amount on the consumer’s part.

Finding a Balance

Limits and deductibles can be tricky to sort out. Finding a balance between the two that is both financially beneficial and which takes all possibilities into account is one of the most strenuous parts of staying insured. One thing to keep in mind at all times is an honest evaluation of yourself and the others on your policy as drivers. This means not only your driving habits, but also the conditions in which you will be driving and parking your car. Remaining conscious these variables is the first step in choosing the kinds of coverage you will need and the limits and deductibles that make the most sense.

Contact Us

For more information on which limits and deductibles make sense for you, contact the Chicago auto insurance agents of Insure on the Spot at 888-972-7283.