When buying car insurance there are a few out of pocket expenses. The first is your auto insurance premium. You can pay the full amount upfront or in many situations you can pay monthly payments for your insurance with your insurer.

Beyond the actual premium amount due to your insurer, if you have physical damage coverages of Collision and Comprehensive than normally you will have a deductible to pay if you use these coverages. Other coverages such as PIP may also come with a deductible if you choose one to help lower the cost of that coverage.

A deductible is what you pay out of your own pocket before your insurance policy kicks in because it is the amount of the loss which you, the insured, is responsible to pay before benefits from the insurance company are payable. 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.

So you may choose a higher deductible (more out of pocket expense to you) 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. 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.

Your car insurance premium and your deductible are the basic out of pocket expenses for your car insurance policy. To find out what car insurance coverages are right for you use our our insurance coverage calculator. Then click here to get start on an affordable auto insurance quote.

In addition to deductibles and premium, if your car is totaled and you don't have sufficient physical damage coverage and/or GAP insurance then you can pay out of pocket expenses to get a new vehicle after your physical damage coverage and/or GAP insurance is exhausted.