When taking out a car insurance policy, you have several options to consider, including collision, comprehensive and liability coverage limits. Keep in mind that your deductible is an important factor in your insurance coverage and deserves careful consideration.

Identification

Your car insurance deductible represents the amount of money you will be responsible for paying should you file an accident or loss claim. For example, if you have a $500 deductible and file an accident claim with damages totaling $1500, you will be required to pay $500 and your insurance will cover the remaining $1000.

Range

While some insurance customers opt for no deductible, typical deductibles range from $100 to $1000, although higher deductibles are available.

Effects

When you take out a car insurance policy, the higher your deductible, the less you will have to pay in insurance premiums. Carinsurance.com advises that you "balance this savings against your ability to absorb a larger out-of-pocket expense."

Significance

Car insurance deductibles apply to each claim or accident. In other words, for each accident claim you file, you must pay the deductible toward the total of the claim. If a claim is less than the deductible amount, the full amount of the claim is your responsibility.

Exceptions

Each state except New Hampshire and Wisconsin "requires drivers to carry liability insurance," according to Insure.com. Your car insurance deductible may not apply to your liability coverage. You may have a zero deductible on your liability coverage even if you have a higher deductible on other types of coverage. Check with your insurance agent for deductible information specific to your policy.

Source:

Carinsurance.com: Insurance Coverage Definitions

Insure.com: Car Insurance Basics