Auto insurance without deductible is a type of policy in which the insured has no financial responsibility for the payment applicable to a certain event . When a traffic accident occurs and the company pays the insured for damages and repairs, it is normal for money to be subtracted from that payment if you have coverage with a deductible , but when this resource is absent, the company must refund the payment in full, as dictated by the contract. In this way, all responsibility for the event is assumed by the company.
In short, the deductible exists to distribute the responsibility for payment between the insured and the insurer and it is not typical of the policy in general, but of the different coverage that it has. In this sense, you can find policies with various coverages, some with a deductible and others not. According to the Insurance Information Institute, this is how the deductible works: “If you have a certain deductible as a specific amount, let’s say that $ 500, that money, the $ 500 are the portion of the damages that you will pay. The insurance will pay the money above those $ 500 that is necessary. If the insurance determines that your loss is $ 10. 000, then the amount of the compensation or the check that you will receive will be $ 9. 500 ($ 10. 000 of the loss less $ 500 of the deductible) ”.
In that sense, when a car insurance is purchased without a deductible, or with a low deductible, all the risk of loss is left to the insurer, but this will imply a Highest premium . According to Allstate, this is one of the ways for the company to accept the highest risk associated with unfortunate events, which may or may not happen. Deductibles are optional in collision or comprehensive coverage, but in most cases, they are not present in liability coverage, which is the minimum coverage acceptable by law.
Although the deductible is optional in most cases, there are some coverages that are subject to to certain state laws that oblige you to pay it, omitting its alternative condition. In these cases, it will be inevitable not to accept this condition that normally applies to some coverages related to personal injury or coverages against uninsured drivers, two of the most delicate situations when it comes to auto insurance, according to Allstate.
You may also be interested in: How to apply for a commercial driver’s license in California