01 Jun Top Ways to Limit Your Losses
What Are Limits And Deductibles?
The basic building blocks of most auto insurance policies are limits and deductibles. These are expressed in dollar amounts and determine both your level of protection and the amount of your monthly premium. Your state’s car insurance requirements and your lifestyle are both factors in deciding the limits and deductibles that are right for you.
Simply put, a limit is the highest amount a typical carrier will pay you for a claim that your insurance policy covers. For example, if your limit is $100,000 and the cost of your accident is $105,000, you’ll have to pay the remaining $5,000.
You’ll often see coverage limits that look like this: $50,000/$100,000. The first number, $50,000, is the maximum amount your coverage will pay per person in an accident. The second number, $100,000, is the maximum your car insurance will pay for the total accident.
A higher coverage limit means a higher payout to you on a covered loss. Increasing your limit will also affect the amount of your monthly premium. An Allstate® agent can help you understand how the limits you choose will impact your insurance costs.
A deductible is the amount you agree to pay out-of-pocket if you make a claim covered by your car insurance policy. For example, if your deductible is $500 and the accident damage costs $1,500, you’ll pay $500 and Allstate will pay the remaining $1,000.
The higher your deductible is, the lower your monthly premium will likely be. Figuring out the deductible that’s right for you depends largely on the amount you think you can afford to pay out-of-pocket if you have an accident. There is no right or wrong decision when it comes to determining your deductible amount-only what works best for you. An Allstate agent can help you understand how the deductible amount you choose will affect your monthly premium.
Choosing your limits and deductibles is an important part of creating your car insurance policy. An agent can answer any questions you may have before you select the amounts you want.