Auto Insurance Deductibles: How to Control Premiums and Manage Risk

The **Auto Insurance Deductible** is the amount of money you must pay out-of-pocket before your insurance company starts paying for a covered loss. It is a critical component of your policy that directly impacts your premium rate and your financial exposure after an accident.

Deductibles Apply to Physical Damage Coverage

Deductibles apply only to the physical damage sections of your policy, specifically:

**Collision Deductible:** Applies to damage to your car resulting from a collision with another vehicle or object (e.g., hitting a tree or rolling the car).
**Comprehensive Deductible:** Applies to damage to your car from non-collision events, such as theft, vandalism, fire, or hitting a deer.

It is important to note that liability coverages (Bodily Injury and Property Damage) **do not** have deductibles.

The Relationship Between Deductible and Premium

Deductibles are a classic example of risk-sharing: by choosing a higher deductible (e.g., $1,000 or $2,500), you take on more of the initial risk, and the insurer responds by lowering your **insurance premiums**.

Strategic Tip: Choose a deductible that you can comfortably afford to pay *at any time* without disrupting your emergency savings. For older cars with low market value, a very high deductible may eliminate the need for Comprehensive and Collision coverage altogether.

Regularly reviewing your **Auto Insurance Deductibles** is a simple and effective way to manage the long-term cost of your vehicle coverage.