A deductible is a specific amount of money you are responsible for before your insurance
company begins to pay on a claim. Higher deductibles result in lower comprehensive and collision premiums.
Depreciation
Most insurance companies reduce your payment because of depreciation, which is the decrease in the
value of your vehicle, or its parts, due to wear, tear and age. You would not, for example, be
reimbursed the full price you paid for tires that have 20,000 miles on them. Your insurer would
reimburse you for the value of the tires at the time of loss.
By using a deductible to eliminate the cost of processing small claims and by applying depreciation
to some items during repair, insurers can provide collision and comprehensive coverage at lower premiums.
What If Your Vehicle Is Stolen Or Totaled?
If your vehicle is stolen and not recovered, or is a total loss (“totaled”) following an accident or other
covered event, collision and comprehensive coverage will pay you the vehicle’s actual cash value (ACV) prior
to being stolen or damaged; therefore, you do not need to select limits for these coverages.
As your vehicle ages and its value declines, so does the amount you will collect for a total loss
to your vehicle. You may want to consider not buying collision and comprehensive coverage on an older vehicle.
If there are any unique features (customization) that make your vehicle significantly more valuable than the
average vehicle, you should discuss this with your insurer in advance. You may be required to pay an additional premium.
If your vehicle is financed or leased, the lender or lessor generally will require you
to carry these coverages with specified deductibles.
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Theft Of Personal Items
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Generally, auto insurance does not cover theft of personal items.
Those items would be covered under a homeowners or renters policy.
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