What is a deductible, really?
It's the number on your policy that decides how much a claim actually costs you. Here's how to think about picking one.
The short version
A deductible is the amount you pay out of pocket on a claim before your insurance covers the rest. If you have a $500 deductible and $3,000 in damage, you pay $500 and your insurer pays $2,500.
Why a higher deductible means a lower premium
Choosing a higher deductible means you’re absorbing more of the risk on smaller claims yourself, so the insurer charges less for the policy. The trade-off only pays off if you actually have that amount set aside when something happens.
Picking a number you can actually afford
A good rule of thumb: choose the highest deductible you could comfortably pay in cash today, not the highest one available. That balances a lower monthly premium against not being caught short after an accident.
