The deductible is what you pay out of your own pocket before your insurance policy kicks in. The theory is the higher the deductible, the lower your premium. For example, increasing your deductible from $200 to $500 on Collision coverage could reduce your premium.

When you get a quote at CarInsurance.com we make this process easy on you. Our coverage page asks you the right questions and gives you advice on selecting a deductible. Deductibles represent the amount you'll have to pay out or your own pocket if you get into an accident.
Lower deductibles mean you'll pay less out of pocket if you have to file a claim, though lower deductibles increase your insurance premium.
Higher deductibles mean you'll pay more out of pocket if you have to file a claim, though higher deductibles decrease your insurance premium.

Therefore, a deductible is the amount of the loss which the insured is responsible to pay before benefits from the insurance company are payable. You may choose a higher deductible to lower your premium because it reduces the exposure to the insurance company. The insurance company pays the remainder of each covered loss up to the policy limits after your deductible amount is paid.

A deductible is not required for all type of auto insurance coverages. For the types of auto insurance coverage that do require a deductible, such as Collision and Comprehensive, you are asked to choose a deductible at the inception of your policy. Since your deductible will be the amount of damages you agree to pay for if you file an auto insurance claim for these coverages you will want to choose an amount you can afford.

Though choosing a higher deductible can substantially lower your auto insurance premium when you file an auto insurance claim you will have to pay the full, pre-established amount of the deductible out of your own pocket upfront in order to receive payment from your auto insurance company. So if you choose a deductible that is too high and you cannot pay than you will end up waiting for the repairs to be done until you can come up with your deductible amount. The deductible amount is due before your car insurance pays out their portion for repairs.