13 Aug What is the Difference Between a Premium and a Deductible?
Trying to choose the right insurance policy means more than simply looking at which policy appears to be the cheapest on the surface. Rather, it requires looking at the premiums, the amount of coverage that is provided and the deductible that you have to pay. Generally speaking, a policy with a higher deductible will have lower premiums, but what exactly is the difference between a premium and a deductible?
What is a Premium?
The premium is the regular amount that you pay toward your insurance coverage. Typically, these payments are made on a monthly basis. The amount of your premium will be determined by factors such as your age, your driving record, the make and year of your vehicle and the type of coverage that you wish to have.
What is a Deductible?
Your deductible is the amount you pay when making a claim with your insurance. For example, if your insurance company determines that your accident costs $10,000 and you have a $1,000 deductible, you will receive $9,000 in compensation because you are responsible for the first $1,000. The more you are willing to pay toward your deducible, the lower your premium costs will be. When making this decision, however, you need to be sure you will be financial comfortable with handling a larger deductible if an accident occurs.