What is Auto Insurance Deductibles in Illinois
Reader’s Question:
Hi. I live in Chicago, and some friends here have been telling me about auto insurance deductibles and how this can reduce my auto insurance premium. How does this go?
Liza
Chicago, IL
Hi, Liza. Usually the most common advice regarding deductibles and lowering auto insurance premium is: raise the deductible and the auto insurance premium will go down. Of course, there are other things to consider when we start to think how our auto insurance premium increases every now and then, but this rule about raising deductible to come up with a cheaper auto insurance premium is very much applicable.
But first, what is a deductible? And what is it for? A deductible is what you pay before the auto insurance company’s coverage will kick in. If your car needs to be repaired, you need to pay the agreed deductible first before the auto insurance company pays anything. If the deductible is $1,000, then you have to shell out that amount first before the auto insurance company pays the rest of the repair job. If the repair costs $1,300, you shell out $1,000 first, and then the auto insurance company will take care of the remaining $300.
Why is this? According to auto insurance companies, if the insured party also takes part financially in the payment of repairs, the insured will not be so reckless in driving the car. This also results in the insured not filing a claim when the repair cost is lesser than the deductible. If the repair cost is just $300, why file a claim and pay $1,000?
The higher the deductible, the lower the auto insurance premium. You need to contact your auto insurance agent to know the details regarding this. As a rule, do not declare a deductible so high that you won’t be able to keep up with it when you need to file a claim in Illinois. Select a deductible according to what you can afford and your evaluation of your risk. Usually comprehensive and collision insurance are the ones with deductibles.
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