Michigan Auto Insurance Guide: Deductibles

I spent two and a half years in the insurance industry operating within the state of Michigan, discussing deductibles with prospective clients on an hourly basis. I began my insurance career at Liberty Mutual Insurance in 2017 as an intern where I called prospects both new and current for certain field agents. From there I went to both Farm Bureau Insurance of Michigan before starting an insurance venture of my own.

Quoting policies while discussing and debating policy coverage and cost options was the main portion of the daily tasks I was dealt in the industry. Deductibles were a major part in my discussions starting out and they are in almost every policy cost discussion between customers and agents to present day, most likely right now while you are reading this line.

An insurance deductible is the money the insured pays out of pocket in the event of a auto insurance claim. The money paid by the insured goes to the towing company to pay a part of the damage repairs, while the rest of the damage is covered by the insurance company.

Simply stated, a deductible is the money the insured pays out of pocket before the insurance policy pays the remaining damage claim, in the case of auto insurance.

The main deductible options issued by insurance carriers nationwide are:

  • $250
  • $500
  • $750

The lowest deductible option at $250 is often the most appealing option to price shoppers, however the insurance premium is higher in this coverage amount. For the average working person $250 is the most viable deductible option due to short-term savings balances held by most Michigan residents. This is a good option for someone who has a median income.

Raising the deductible to $500 lowers the premium payments another bracket level each month, however reality sets in for most Michiganders as it is a high dollar amount to shell out in the event of an accident. In fact, a number of residents won’t consider this fact based on their personal budget whether or not this is a realistic unexpected payment.

Bumping up the deductibles another level to $750 will significantly lower the premium and save policy costs up front, however if in an accident where the deductible must be paid that is close to a grand out of pocket! I don’t know about you all but that would be a heavy hit for me and I may be upset I didn’t get the proper coverage in the first place for slightly more premium.

The lesson of this blog post is to calculate your budget carefully and determine what is sensible to pay out of pocket in the case of an auto insurance claim. Ask yourself something along the lines of, “Would I be able to pay $750 out of pocket today to cover the deductible for an insurance claim?”. Asking yourself if it is worth saving the premium amount quoted with the risk of paying a large dollar amount deductible out of pocket. It’s fairly simple but very important to ask the question, to be prepared in all areas of auto insurance coverage.

Drive Safe Michigan,

Michael Moran

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