Insurance tips: Set aside money for your car insurance deductible

TL;DR
Set aside an “emergency fund” that gives you a stash to use as your car insurance deductible.

Car insurance claims are no fun. For one thing, they involve paying your car insurance deductible. And that can get expensive. Say you set your deductible at $500. Then, on your way home from grabbing some lunch, some jerk rear-ends you. Not your fault, right?

Here’s the catch:

You might have to file the claim through your own insurance (hopefully you have collision coverage.) Wait – shouldn’t the other driver’s insurance pay? It’s their fault!

Yes. Yes it is. And their insurance will pay…eventually. What could happen is something called subrogation. Long story short, you file the claim with your insurance company, they help you get your car repaired (meaning you have to pay your deductible), then they go after the other driver’s insurance company to get your deductible back.

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In the end, you get reimbursed. Technically you didn’t end up paying for the car repairs. The only problem is that it could take a while. So, ask yourself this – could your bank account take a $500 hit right now?

Then let’s reverse the situation: you’re the one who rear-ended the other driver, and unfortunately you picked a losing fight with a semi-indestructible SUV. The accident causes $900 of damage to your car. Oops. You’d have to pay your $500 deductible (the insurance company pays the rest)…except you’re not getting your deductible back.

Like we said – oops.

Anyways, the point we’re making is that you need to have a stash of cash that you can use to pay your car insurance deductible. $500 is a lot of money to come up with on short notice. It’s not like you were planning to get rear-ended, or planning to rear-end someone else, right? So it’s better to be prepared and have your emergency fund ready to roll in case of unexpected car accidents, surprise deer running into the road, falling trees, extremely rude vandals, fires…take your pick.

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