It's time we demystified home and auto insurance deductibles. Do you know the difference between an auto insurance deductible and your health insurance deductible? Find out!
Were deductibles ever mystical that they should be demystified? Doubtful, but catchy titles are a must—glad we got your attention! Four-syllable words that are associated with contracts or something boring like insurance tend to make us gloss over and nod in feigned understanding, which can result in us never fully knowing what they mean or how they might apply to our real lives.
As experts in home and auto insurance, we also have to remind ourselves that most people’s thoughts immediately go to health insurance when we mention words like deductibles. Rightfully so—since we spend a great deal of time shopping, thinking about, and actually using our health insurance. Thankfully, the function of a deductible is pretty much the same in health insurance as it is in your home & auto insurance, so we don’t have to learn a totally new concept.
A deductible is the way an insurance company allows us to share in the cost of a claim.
Sharing is caring, after all.
Though the purpose of a deductible is the same across homeowners, auto, and health insurance (to keep premiums low by sharing the cost of the claim), the way they are applied is very different and important for you to understand.
With home and auto insurance, you will pay your deductible every time you have a claim during your policy period.
With health insurance, you are on your own, paying out of pocket for your medical expenses until you meet the deductible. This deductible resets every year.
You can utilize higher deductibles to reduce your premiums. At Salt, we believe that your home and auto insurance should be reserved for the big, life altering events that happen. Turning in small claims that might not meet the deductible (your share) will not help you keep your premiums down. Insurance companies use severity and frequency of your claims history to establish your rate every year at renewal. Severity is the size of claim and frequency is how many times you made a claim.
So, did we demystify deductibles for you? If you have any questions about deductibles or any other insurance terms, let us know in the comments!