When drivers are obtaining auto insurance for the first time or even just reviewing a policy for possible exchange, they notice a lot of paperwork is involved. Reviewing and attempting to understand everything in the documents can be very confusing, and there are many words or phrases that seem to make no sense to anyone except those involved in the insurance industry.
One such factor that can alter your auto insurance quotes is the level of excess the owner chooses. This can seem like a rather confusing concept but is actually quite simple when properly explained. The purposed of having auto insurance is to protect the vehicle owner, the finance company (if any) and the other drivers or property owners who may be involved in an accident. If such an accident or property damage should occur, an insurance claim is then filed with the company providing auto insurance coverage.
Dissecting the claim requires an experienced claims representative. The representative works for both the insurance company and the policy holder to determine the monetary value of damage caused. Part of the claims payment process will determine the amount that the insurance company will pay as well as the portion that the customer is responsible to pay in case of accident.
The excess level, sometimes called the deductible, is the amount the policy owner has agreed to pay for any claim filed, regardless of the total amount of damage caused. The policy owner agrees to the excess level upfront, when the auto insurance quotes are accepted and an actual policy is purchased.
The excess level, or deductible amount, varies from zero dollars up to a common maximum of one thousand dollars. The excess level and policy premium have an inverse relationship. This means that a zero deductible amount will result in a higher premium amount, since the insurance company will have full responsibility for payment of any claim.
However, if the driver chooses a higher deductible amount, they have an excess level that reduces their total insurance premium price. Then, if an accident occurs that results in a claim payment, the consumer is required to pay their deductible level; and the insurance company will pay the balance of the claim amount. Auto insurance quotes give the buyer several excess levels to choose from, based on driving history and comfort level.
Drivers who are confident that their safe driving record will continue may already have a lower insurance premium and choose to opt for the zero excess level option. However, if new drivers are researching auto insurance quotes, they may request a policy with a higher excess level to keep the cost of the overall policy at an affordable price. These drivers may benefit from a lower policy price, but also run the risk of having to pay the excess level, or deductible, if they are involved in an accident. Therefore, the drivers who select a higher excess level should considering having a savings account funded with their portion of the deductible in case they are ever involved in an accident and required to pay for some of the expense.