Do PIP Deductibles Really Save You Money

When you are buying car insurance your insurance agent will throw a lot of information at you in a very short amount of time. You will be expected to digest this information and decide if what they are offering is the best avenue for you and your family. This is a hard position to be in so it is best to be prepared for the barrage of information that will be handed to you.

One of the offers your agent will probably make you will be in reference to a PIP deductible. A deductible is when you agree to pay a certain amount toward your medical bills and /or lost wages before your insurance takes over, usually this is $1,000.00. Insurance companies will also offer lower deductibles, $250.00 and $500.00. As your agent will tell you, having a deductible will lower your premium payment. If you decide on a $1,000.00 deductible, your premium will be around $20.00 less every six months. That $40.00 savings a year can cost you $1,000.00 out of your own pocket if you are in an accident.

What your agent will likely not tell you is how these deductibles are great deals for the insurance companies. This is because if you are in an accident and you have a $1,000.00 deductible you have to pay $1,000.00 before the insurance kicks in. Not to mention that you will also have to pay anything over $10,000.00. Few people realize that the At-Fault insurance companies reimburse your insurance company the entire amount that has been paid for medical bills and lost wages after the first $1,000.00.

There is what’s called an inter-company deductible which is when the At Fault company repays your insurance company for your lost wages and medical expenses less $1,000.00. This is standard. When you have a $1,000.00 deductible your insurance company doesn’t have to cover that inter-company deductible because you already have. This may explain why insurance agents push for deductibles under the pretense they are saving you money.

The best way to get the most coverage for you and your family is to be informed when you meet with your agent. There are some basic questions to ask your agent.

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