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 best for you and your family. This is a hard position to be in. It's best to be prepared for the barrage of information that will be handed to you.
What is a deductible?
One of the offers your agent will probably make will be 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. Insurance companies will also offer lower deductibles, $250 and $500. As your agent will tell you, having a deductible will lower your premium payment. If you decide on a $1,000 deductible, your premium will be around $20 less every six months. That $40 savings a year can cost you $1,000 out of your own pocket if you are in an accident.
Are deductible a good deal for the insurance company?
What your agent will likely not tell you is how these deductibles are a great deal for the insurance company. This is because if you are in an accident and you have a $1,000 deductible, you have to pay $1,000 before the insurance company has to start paying for your injuries. Not to mention that you will also have to pay anything over $10,000. 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.
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. This is standard. When you have a $1,000 deductible, your insurance company doesn’t have to cover that inter-company deductible because you already paid the deductible. This may explain why insurance agents push for deductibles under the pretense. They are saving you money.
What this means for you
The PIP deductible is as bad of a deal for you as it is a good deal for the insurance company. If you are in an accident in Kentucky, are injured and have to seek medical attention, you are responsible for the first $1,000 in medical bills out of your own pocket. This is because you elected to save $40 a year. It would take 25 years for you to be accident free to come out even. The odds are not in your favor. Plus medical providers will want to be paid. Do you really need the added stress of dealing with bill collectors while you are recovering from injuries from an accident? The answer is no, you don’t.
The best way to get the most coverage for you and your family is to be informed when you meet with your agent. You can do research online to help you come up with questions you should ask your agent. If you don't know what your insurance will pay if you're in an accident, make sure to ask your insurance agent. If there's something you don't understand, make sure to have them explain it to you. You want to know what your insurance will cover so you don't have to worry about it if you're in an accident.