When it comes to insurance policies, the higher your deductible, the lower your premiums will be. A deductible is the amount you pay out of pocket when you file a claim. It can be a specific dollar amount or a percentage of the total insurance amount of a policy. This amount is set according to the terms of your coverage and can be found on the statement page (or front page) of standard insurance policies for homeowners, condominium owners, renters and cars.
Percentage deductibles generally only apply to homeowners policies and are calculated based on a percentage of the insured value of the home. If your claim is approved, your deductible will normally apply when your insurance company issues your payment. If the other driver is officially deemed to be at fault, your insurance company can pay for repairs if you file them and you won't have to pay your deductible. However, if your vehicle is damaged in the accident and you decide to file a collision lawsuit, then you would pay your collision deductible.
Your deductible affects your out-of-pocket expenses, so it's important to choose an amount that fits your budget. If that potential increase can cause you to pay for the repair yourself, there is little reason to opt for a lower deductible. If you have collision coverage, you can also choose to use your own insurance company, which will request reimbursement (including your deductible) from the other driver's insurance company. Coverage deductibles for uninsured drivers tend to be regulated by your state, rather than you choosing the amount.
In the simplest definition, an auto insurance deductible is what you pay out of pocket on a claim. If you have enough money to cover a high deductible in the event of a claim, you should go that way. However, this depended on the state; Michigan saved only 4% for the deductible increase, while Massachusetts saved an average of 17%. Liability coverage generally has no deductible; your insurance company will often pay the full cost (up to the limits of your coverage) if you have to pay another party's medical bills or damaged property.
You would compensate for the increased cost of the comprehensive premium by having a higher deductible for collision insurance.
