10/17/2026
💰 What Is an Insurance Deductible, and How Does It Really Work?
You've probably heard the word deductible when talking about insurance, but do you know what it actually means?
Simply put, your deductible is the amount you're responsible for paying toward a covered claim before your insurance pays its portion.
🚗 Here's an example:
Let's say you're in a car accident, and the covered damage to your vehicle costs $5,000 to repair.
🔹 Your deductible is $1,000.
🔹 Your insurance pays $4,000.
🔹 You're responsible for the remaining $1,000.
Pretty simple, right? But here's something else worth knowing!
💡 A Higher Deductible Can Mean a Lower Premium. Choosing a higher deductible may lower your monthly insurance costs, but it also means you'll pay more out of pocket if you have a covered claim.
💡 A Lower Deductible Can Mean a Higher Premium. You'll generally pay more for your insurance, but less out of pocket when a deductible applies to a claim.
💡 Not Every Claim Has the Same Deductible. Auto and homeowners policies can have different deductibles depending on the type of coverage or damage. Some homeowners policies even have percentage-based deductibles for wind and hail damage.
✅ The Bottom Line: The cheapest insurance premium isn't always the best deal. It's important to choose a deductible you can comfortably afford if something unexpected happens.
Bill Barrow | Independent Agent | 972.777.4682
