What is a Deductible?

              An auto insurance deductible is the amount you agree to pay out of pocket toward repairs or claims before your insurance coverage kicks in. Essentially, it's the part of the financial responsibility you take on in the event of an accident or damage to your vehicle. For example, if your deductible is set at $500 and you file a claim for an accident that caused $3,000 in damage to your car, you’ll pay $500, and your insurance company will cover the remaining $2,500. Deductibles are commonly applied to collision and comprehensive coverages but do not affect liability coverage, which handles damages or injuries caused to others.

             Choosing a higher deductible generally lowers your monthly insurance premiums because you’re assuming more risk. Conversely, a lower deductible means your premiums will be higher, but you’ll pay less out of pocket when filing a claim. For instance, if you have a $1,000 deductible and you incur $900 worth of damage from a minor fender-bender, you’ll end up paying the entire $900 since it’s below your deductible limit. Therefore, selecting the right deductible amount depends on your financial situation and how much you’re willing to pay upfront in the event of an incident.