Your Share of the Premium
A deductible is basically the amount “deducted” from an insured loss. Deductibles have been an essential part of the insurance contract for many years and represent a sharing of the risk between the insurance company and the policyholder. When repairing your home or replacing personal possessions, the amount of the deductible would come out of your own pocket.
A deductible can be either a specific dollar amount or a percentage of the total amount of insurance on a policy. Generally speaking, the larger the deductible, the less a consumer pays in premiums for an insurance policy. Deductible amounts can be found on the declarations (or front) page of standard auto insurance policies.
Here is how it works: if you have a $500 deductible, that $500 would be deducted from your claim. So, if your insurance company has determined that you have an insured loss worth $10,000 you would receive a claims check for $9,500.
You can lower the cost of insurance by raising your deductible, remember, you will be responsible for the amount you choose if you have a loss.
Raise your deductible. By choosing a policy with a higher deductible—how much you pay out of pocket for a loss before your insurance kicks in—you can save from 15% to 40% or more on the cost of your premium.