What are deductibles in car insurance?

Further reading

What auto insurance deductible is best?

There are a lot of things that are going to go into choosing te right insurance deductible for your car insurance policy, and you definitely want to think this decision through as much as possible.

A lot of insurance companies, especially the more trusted and reputable organizations like Florida Insurance Now, are able to provide you with help and assistance every step of the way through choosing your car insurance deductible – and you’ll want to make sure that you lean on their expertise and their professionalism to help you as much as possible.

At the end of the day, however, it’s really going to come down to personal factors that influence the type of deductible you choose moving forward. Here are a couple of things you want to think about before you sign on the dotted line.

What kind of emergency fund do you have access to?

If you have access to an emergency fund that can completely cover your deductible and then some, you probably don’t have to worry all that much about jacking up your deductible to as high a level as possible and then covering that deductible cost from your emergency fund while saving quite a bit of money on your insurance premiums each and every month.

If your emergency fund isn’t quite as high as you would like it to be, and would not be able to cover door deductible out-of-pocket, you probably want to lower that deductible and pay higher insurance premiums on a regular basis.

What is the total value of your vehicle?

The value of the vehicle that you are insuring is going to have a huge impact on the kind of deductible that makes the most sense going forward.

A skyhigh deductible on a very expensive or brand-new vehicle can help you to save quite a bit of money on your insurance, but if you are driving around a 10-year-old vehicle without a lot of value under the hood you want to lower your deductible so that you don’t have to pay a tremendous amount of money out-of-pocket to cover repairs that your insurance would have covered with a lower deductible.

At the end of the day, you really want to think about these factors before you choose your deductible going forward. You’ll want to balance insurance protection coverage with your premium prices, finding that sweet spot that makes the most sense for you.

Are Auto Insurance Deductibles Tax Deductible?

A good example of the Florida auto insurance questions we get concerns auto insurance deductibles as tax deductions. This is a good question. After all, one of the most unpleasant parts of getting in a car accident comes down to paying the deductible portion of your repair bill. However, when it comes to alleviating at least some of the suffering of said deductible, the notion of being able to write off the incident on your taxes can naturally appeal to you.

In terms of a question like “Are auto insurance deductibles tax deductibles”? There are a few important things that you are going to want to keep in mind.

Is My Auto Insurance Deductible Tax Deductible? In terms of accidental damages, or the possibility of theft, as it pertains to your car, keep in mind that our federal tax laws WILL allow for a deduction on your taxes. While that sounds pretty great on paper, making this a reality is unfortunately easier said than done. There are a number of different limitations to this write-off that you are going to want to keep in mind:
  • Certain losses to things you own can become a deductible later on. However, this is only the case if the car accident in question was not your fault. In the event of willful negligence/acts, the IRS makes it clear in no uncertain terms that you get nothing. If the car is stolen, or if you are tricked out of ownership that amounts to a clear case of fraud, you can claim the deduction.
  • In order to figure out the loss, you are going to need to calculate the adjusted basis of the car, which generally comes down to the amount that you paid. Once you have a figure, get an idea of how much of that value suffered due to the accident. The lower number is generally the one you can claim.
  • Subtract whatever the insurer has paid you, and then subtract one hundred dollars from that amount. Add up all of your losses for the year, and then take away ten percent of your gross income from that total. Anything that’s left over is deductible.

This is a very basic summary of the issue. If this is a concern on your part about the subject of claiming your accident as a deduction later on, contact us today at Florida Insurance Now with any questions you may have.