What is a deductible? Print
Modified on: Mon, 16 Jul, 2012 at 7:29 PM
A lower deductible means you'll be spending less out-of-pocket (should you need to make an auto claim), and your insurance company would likely be covering more of the repair costs after an accident. So a lower deductible means a higher premium (to offset that added coverage). By the same logic, increasing your deductible can usually help bring your premiums down.
Here's an example. Let's say you get into an accident, and the repairs to your car are going to cost $1,500. If you've set your deductible at $500, then you'll pay the first $500, and your auto insurer would likely pay the remaining $1,000 to get your car fixed and back on the road. (If there are potential situations that could be an exception on your policy, you should talk to your agent about what that could be.)
Alternately, if your accident results in, say, $500 worth of damage (or less), you'll pay for all of the repairs, as those costs fall within the amount of your set deductible.
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