When you buy insurance, you receive an insurance policy, a document that spells out exactly what is and isn’t covered. The covered items are called your benefits. The amount you pay for insurance is called the premium. When you have costs and submit bills to your insurance company, this is known as filing a claim. Your deductible is the amount you must pay toward repairs or expenses before the insurance company pays.
When you file a claim, typically your insurance company will pay only a portion of your costs, according to what is outlined in the insurance policy. The amount of a claim that you must pay before the insurance company will pay is called the deductible; the amount you pay toward each medical bill is called the co-pay.
Typically, the higher the deductible amount, the less expensive the insurance premium. So it’s a good strategy to get a policy with the highest deductible that you’d be able to comfortably afford if you had to. This will minimize the cost of your policy.
Your credit score could impact how much insurance companies charge you in premiums. To learn more, see the topic All About Credit.
Car insurance can include different types of insurance on one policy. For example: collision insures you against damage to your vehicle caused in an accident; comprehensive protects you against other forms of damage to your car, such as fire, theft, flood, and vandalism; liability pays for injuries and property damage you cause to other people’s property with your car if you’re at fault; medical payments covers medical care for you and your passengers if injured in an accident in your car.
Ask insurance professionals to determine how much coverage you need. In terms of your vehicle itself, the amount depends on how much money you could spare to repair or replace it. The higher the value of your car, the more coverage you should consider. For other forms of insurance, you should have enough to protect your assets in case you get sued.