A deductible is the amount you’re responsible for before insurance covers the rest in the instance of a claim. In an interview with Carinsurance.com, Producer Deece Catanzaro explained how a car insurance deductible works, factors to consider when choosing your deductible amount and how much you can save on auto insurance by increasing your deductible.

“Deductibles help distribute risk between the insured individual and the insurance provider and contribute to keeping insurance premiums more affordable,” Deece said. “For instance, let’s say your car sustains damage in an accident and you seek repairs. The repair cost is quoted at $1,500. If you have a $500 deductible in place, you would pay the first $500 yourself, and then the insurance company would cover the remaining $1,000.”

When deciding on a deductible amount, Deece recommended considering the value of your vehicle: “It’s imprudent to have a high deductible – such as $1,000 – on a car valued at only $3,000, as you would end up paying out a significant portion of the car’s worth in the event of a loss.”

He added that typically, raising your deductible from $500 to $1,000 can result in an average savings of approximately $188 per year on comprehensive and collision coverage collectively.

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