When you buy an auto insurance policy, your state mandates a specific minimum level of coverage, and you have the options of adding comprehensive and collision benefits to the policy. Collision coverage pays for repairs to your car when you are in an accident. Comprehensive coverage protects you from other damage caused by such factors as animals, storms, theft and vandalism. A $500 deductible means that when a covered event occurs, you must pay the first $500 before your insurer pays benefits.
More Deductible Details
Your insurance agent discusses your deductible options at the time you buy coverage. You select a deductible, normally from zero to $1,000, for both comprehensive and collision. Typically, the lower the deductible amount you choose, the higher the premium. If you choose a $500 deductible, are in an accident and receive an estimate of $3,500 for repairs, you pay the first $500 and the insurer pays the remaining $3,000 balance.
Neil Kokemuller has been an active business, finance and education writer and content media website developer since 2007. He has been a college marketing professor since 2004. Kokemuller has additional professional experience in marketing, retail and small business. He holds a Master of Business Administration from Iowa State University.