It is just as important to understand how your insurance coverage works as it is to make sure that you have insurance coverage. Most insurance coverage plans today, regardless of the type of insurance being provided, have a deductible.
A deductible is the financial amount you will be responsible for paying before your insurance companies financial obligation begins. A common misconception about insurance deductibles is that you will have to fully pay your deductible before your insurance company pays anything. It is important to remember that your financial responsibility for your insurance deductible is paid to the company providing you a service, NOT to the insurance company! How your insurance plan works and how the deductible affects it is affected by the type of insurance coverage you are receiving.
If you have to make a claim against your homeowner’s insurance policy, the insurance company will assign an adjuster that represents their best interest to come out and inspect your home and estimate the damages and cost of repair. The insurance company will then look at the estimated cost of repair for the damages and will subtract your deductible from the estimate, offering you a check for the remaining amount of their financial obligation. For example, if the adjuster determines that the damages to your home will cost $10,000 to repair and your deductible is $1,000 then the insurance company will offer you a check of $9,000 for your claim. You will then have money available to you instantly to begin the repairs on your home, which may buy you some time to be able to save the amount of money you will need to pay out for your deductible. It is a good idea to ask the contractor you plan to use to repair the damage to your home to come out and work with the insurance company adjuster, hopefully they will be able to come to an agreeable estimate and you will be able to receive a fair estimate from both the adjuster and your contractor.
Your automobile insurance coverage can include comprehensive, collision, and liability coverage. Liability coverage is used only for damages caused to another driver and not for repairs to your own vehicle, so the deductible applies only to comprehensive coverage and collision coverage claims. The most common automobile insurance deductibles are $250, $500, or $1,000 – and the higher your deductible is the lower your monthly premium usually is. If your car is able to be repaired, the insurance company will cut you a check for the amount of the cost of repairs with the deductible subtracted out of the value of the check; and if your car is totaled then the insurance company will pay you the value of your car with the deductible subtracted out.
If you’re in an accident and don’t immediately have the funds to pay your deductible there are a couple things you can do to help you cover the cost. The first thing is to wait it out – although you do have to report claims to your insurance company immediately, you don’t have to have the repair work performed immediately. If your car is legally safe and still drivable after an accident, you can drive it while you take the time to save the money to cover your deductible. Being patient on repairs will also help you towards the cost of your deductible if your automobile insurance provides coverage for a rental car and offers a buyout amount on the rental. Many insurance providers will offer to pay a cash amount in lieu of paying a rental directly, and if you can wait for the repairs to be completed and go without your vehicle then you can apply this money towards your own out-of-pocket expenses. You can also shop around to multiple repair shops to find the best deal on the cost of your repairs and to see if there are used parts available for the repairs. You can also limit the amount of work you actually have completed on the repairs – repair only what is necessary to make the vehicle drivable and safe again, not what it will take to make the vehicle whole and beautiful again.
Unfortunately, issues with not having the money to pay your health insurance deductible can be a little more difficult and trickier to solve than issues with your homeowner’s insurance or automobile insurance deductibles. Although you still are not responsible for paying the insurance company the amount of your deductible before they pay out their responsibility of covered costs to the doctor or hospital, the doctor or hospital will typically require you to pay all or at least a portion of your deductible before services can be performed. And although no one should miss out on necessary medical care because of inability to pay for care, many do. In 2014, 28% of insured Americans avoided some aspect of medical care due to cost, according to the Commonwealth fund, a private health care foundation.
If you find yourself in a position of having to put out a large sum of money for medical care and you don’t have the funds immediately available, there are still a few things you can do. The first and best thing you can do is to try to plan ahead if you have a large deductible that you know you would have trouble coming up with by enrolling in a Health Savings Account (HSA) and contribute to it regularly. You can also try to negotiate with your medical provider and see if you can pay a portion of the deductible now and setup a payment plan to pay the remainder of the balance later. Some medical providers will even allow you to have services performed and bill you for the deductible amount later. You can also reach out to a medical charity and see if they will help you cover the costs of your deductible, so you can have services performed without waiting.
Although it can be scary and stressful to think about how you will come up with the money to cover your deductible for any type of insurance claim, having insurance coverage is imperative in minimizing your out-of-pocket costs and protecting your financial security. Remember there are many options for all types of insurance coverage that can work around your specific needs for a deductible. If you would like to review or compare your current coverage, or need to get new coverage, contact us today to discuss your insurance needs!