If you have a $1,000 deductible on any type of insurance, that means you must spend at least that amount out-of-pocket before your insurance company begins to pick up some of the tab. Practically all types of insurance contain deductibles, although amounts vary. When purchasing insurance, ask the insurance agent about the deductible, and make sure you know what is and is not covered under the policy. It's boring, but read the policy carefully.
Just about any kind of insurance contains a deductible, whether it is medical coverage for you and your family or for your house, motor vehicles or any other items you want to insure. For example, if you have a $1,000 deductible on your car for collision insurance and the bill to repair the vehicle comes to $4,000, the insurance company will only pay $3,000 on it. You are responsible for that initial $1,000.
Choosing a Deductible
The higher your deductible, the cheaper your insurance premium payment. You must weigh your ability to pay a higher amount out-of-pocket if you have a claim versus paying less for your overall insurance premium. While automobile, homeowner and renters insurance are fairly straightforward regarding deductibles, health insurance might be a little more complicated. Check your health plan carefully or discuss it with your health insurance representative to ensure you understand the relationship of co-pays to deductibles and insurance percentage payment breakdowns. For example, you might have $1,000 deductible on your health insurance plan. In most cases, co-pays for in-network doctors don't count toward your deductible, but if you use medical services outside of the network, you must pay the first $1,000 before the insurance company starts to reimburse you for a percentage of the costs.
If you can afford it, ask your insurance agent how much you would save if you raised your $1,000 deductible even higher. Of course, the disadvantage is the other side of the coin. You could rack up a series of smaller repairs, such as broken windows on a house or car, that don't make up the deductible and happen at different times so they can't be combined for insurance purposes.
To make sure you can pay that $1,000 health insurance deductible if you or a family member is sick or hurt, or the deductible for home or auto insurance, establish a savings account and put money aside for just this purpose. That way, you have peace of mind knowing that, if issues arise with your health or property, paying the insurance deductible won't be a problem.
Jane Meggitt has been a writer for more than 20 years. In addition to reporting for a major newspaper chain, she has been published in "Horse News," "Suburban Classic," "Hoof Beats," "Equine Journal" and other publications. She has a Bachelor of Arts in English from New York University and an Associate of Arts from the American Academy of Dramatics Arts, New York City.