What is a deductible in auto insurance?

A deductible in auto insurance is best defined as the part of the repair cost that the policyholder is responsible for paying out-of-pocket. When a claim is made, the insurance company will cover the costs that exceed this predetermined amount. For example, if the repair costs are $2,000 and the deductible is $500, the insurance company pays $1,500, while the owner pays the $500 deductible.

Understanding this concept is essential for policyholders as it directly affects their out-of-pocket expenses during an insurance claim. It is also important to note that deductibles can vary widely depending on the specifics of the insurance policy chosen, which can influence the overall premium costs.