Published: September 2017
A deductible is a key feature of many types of insurance coverage. It is the amount of money you pay out of your own pocket toward a covered claim. You'll typically find deductibles for certain coverages in homeowners, renters and auto insurance policies.
A policy may have multiple deductibles. For example, if your car insurance policy has comprehensive coverage and collision coverage, you likely have a comprehensive deductible and a separate collision deductible.
Let’s say the collision coverage on your car insurance policy has a $500 deductible. You damage your car in a covered accident; it will cost $3,000 to repair. You will pay $500 toward repairs, and your policy will cover the remaining $2,500.
Unlike health insurance, in which you typically meet one deductible per calendar year, the deductible on an auto or homeowners insurance policy’s coverage will apply each time you file a claim.
Insurers offer a range of deductibles, and you can typically choose the deductible that fits your needs. According to the Insurance Information Institute (III), common deductible amounts for home and auto insurance coverages are $500 and $1,000 — but amounts vary among insurers and policies.
Your deductible typically affects your premium, or the cost you pay for your policy. The higher your deductible, the lower your premium will likely be. That is because, with a higher deductible, you are taking greater responsibility for the expenses of a claim.
A local agent can help you find the right balance of deductibles and premium costs for your budget.
