What does a deductible do?

I noticed that I have deductibles on my policy. I have one listed for uninsured motorist property damage, comprehensive coverage, and collision coverage. What's the purpose of them?

Answer
“A deductible on your car insurance policy is the amount you agree to pay if your vehicle is damaged and you submit a claim before your insurance will actually pay out.
For example, if you’re hit by an uninsured driver, your uninsured motorist coverage would apply. You would pay that deductible before your insurance pays anything. If the damage is $1,500 and your deductible is $250, your insurance would cover $1,250.
Insurance companies have deductibles to help reduce the number of small claims that people submit. As insurance is based on risk, insurance companies would risk losing money if anyone could submit a claim at any time. This would also increase rates across the board. By having deductibles, rates remain stable and help moderate claims.
However, most insurance companies offer low deductibles. The lowest amount companies offer can be anywhere from $0 to $250. Should you be concerned about paying a deductible, look into your options to carry a lower amount. Alternatively, you can shop new car insurance policies on the Jerry app to save on your policy, regardless of whic deductible you choose.”
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Emily Maracle
Answered on Sep 09, 2021
Emily Maracle is a car insurance specialist living in New York. Originally from the Pacific Northwest, she has a degree in English Literature and a background in customer service. She enjoys cooking, gardening, and living sustainably. In the future, she can't wait to upgrade to a hybrid or electric car.
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