When you get your auto insurance bill and look over the list of coverages, you’re not alone if you find it confusing. One of the things listed is a deductible on your collision or comprehensive coverage. Many people don’t understand what their auto insurance deductible is or how it affects their policy.

A deductible is the amount the policyholder has to contribute toward fixing damage to his or her vehicle. For instance, if an incident results in $3,000 worth of damage to your vehicle and you have a $500 deductible, the insurance company will pay the remaining $2,500 after you’ve paid the required $500.

What many people don’t know is that they can adjust their deductible, which will affect the price of the policy. A very high deductible will lower the premium, since the insurance company knows that you are going to pay a larger portion of the repair bill should you have an accident. Conversely, a very low deductible will result in a higher premium.

Many factors determine what your deductible should be set at. If you have adequate savings, available credit and reliable income, you may be able to set your deductible very high, resulting in lower premiums. If your budget is a little shaky, you may want to keep your deductible lower, so if an incident does occur, you’re not financially strained by the contribution you’re required to make.

Every person’s situation is different, so it’s a good idea to consult with your independent insurance agent and discuss what is best for you. He or she can tell you how much your insurance cost will change if you adjust your deductible, and you can decide together what the wisest decision is for you and your family.

Get the coverage you need. Call Texas Insurance Agency at (713) 675-2626 for more information on Houston auto insurance.