If you damage your vehicle while driving into a garage and need to have it fixed at a shop. You can either cover the expense or claim your auto insurance. However, depending on the cost of the policy, filing a claim requires paying a deductible. However, you won’t have to pay a deductible if you have first-dollar coverage because the insurance company will cover the entire amount.
In other words, first-dollar coverage is a kind of no-deductible insurance policy in which the insurance provider pays the expenses as soon as a covered event happens. Although there isn’t a deductible, the provider will pay out less than with comparable plans that do, or the premium for this coverage will be higher. Furthermore, you will gain more understanding about first-dollar coverage if you continue to read this article.
How Does it Work?
First-dollar coverage is available on homeowners insurance, health insurance, and auto insurance policies. Usually, it exists up to the overall amount of the policy but is lower than the overall amount in the well-known deductible-based plans.
For this reason, first-dollar coverage is not popular, unlike deductible-based plans. Because the insurance company is taking a greater risk of insuring, higher premiums are charged for insurance plans. However, this coverage is less common in home and auto insurance companies because of high premiums.
Is First Dollar Coverage Right for Me?
First-dollar insurance coverage is a good option for people who do not have much cash savings they can use on deductibles if they get involved in an accident. This is also good enough for those who do not have money to pay deductibles for medical-related costs.
It can stand as supplemental insurance to cover some of the beforehand expenses for some medical expenses. However, in cases where you do not have funds to pay premiums for major medical insurance, with the basic first-dollar policy, you can get some level of medical coverage.
When Do I Need First Dollar Coverage?
An instance where you may need first-dollar coverage would be if you get involved in an accident and cannot afford to pay your medical deductibles or copays. While savings are important if you do not have an HSA or any other types of health insurance savings or investment accounts, this insurance will offer coverage to cover these initial costs while you determine how you will pay off extended costs beyond your policy limit.
Benefits of First Dollar Coverage
There are several advantages to first-dollar coverage. One of these benefits is that the insurer requires no deductible from the policyholder. this coverage offers some features at the expense of the policyholder. It is then up to the policyholder to decide what feature they need. The following are some of the benefits of first-dollar coverage:
- Claims are covered from the beginning without needing the policyholder to pay for the claim.
- During claim filing, no copayments or deductibles are required.
Due to these benefits, this insurance coverage is an option to consider if you need a policy that requires no out-of-pocket payment for insurance.
Disadvantages of First Dollar Coverage
Just as this coverage has benefits, some disadvantages may determine whether or not it’s a good idea for you. These disadvantages include:
- Higher premiums.
- If both the premiums and deductible plans are similar to each other, the insurer may offer lesser coverage on the first-dollar plan.
Paying more on premiums may be one of the reasons why this coverage isn’t a good option to consider. In cases where these premiums do not fit into your budget, taking this insurance is not a good idea.
What Should I Know About this Coverage?
Before proceeding with this coverage, it is important to be aware of some things. Irrespective of whether you want homeowners insurance, health insurance, or auto insurance, the following are things you should know:
- Coverage is offered up to your policy’s full amount.
- Coverages are often more common in health insurance than in home or auto insurance because of how high premiums are.
- It doesn’t require copays.
- Most policyholders are more likely to get medical care after an accident.
First-dollar coverage seems like a good idea, but it is important to be aware of these facts before applying to prevent confusion along the line.
Where Can I Get First Dollar Coverage?
Several insurance companies offer first-dollar policies. These companies can be accessed online, allowing you to compare several insurers and their plans, or contact a car insurance company directly to gain more knowledge. You can also select an insurance agent or broker to help identify the best plan for you through their wide network of insurers. This way you can easily get full details on the best insurer for you.