Auto insurance deductible is the amount that you agree to pay out of your own pocket before the insurance company pays the rest of the amount up to your coverage limit when you file a claim for damages to your car. So, if your car suffers damages worth $1200 in an accident and you have selected a deductible of $500, then that means you will have to pay $500 and your insurance provider will pay the remaining $700.
You would obviously want the company to pay all the expenses. So you may apparently prefer a zero deductible. But that may not work to your advantage because the lower your deductible, the higher your auto insurance premiums and vice versa.
This makes sense because every time you have an accident, it will cost your insurance company more money and you are more likely to file claims. So a higher auto insurance deductible will mean lower insurance premiums each year thus saving you significant amount of money annually.
However, when selecting your deductible you must remember that this is the amount you “have to” pay if you were to file claims with your insurance company for damages to your car. So, make sure that it’s an amount that you can afford to pay without any financial hardships. It’s always better to ask your insurance provider for auto insurance price quotes for both higher deductibles and lower deductibles so you can pick the one that suits you best.
