What is a deductible in car insurance?

Car insurance is one of those requirements in life that we never really think about until the day we need it. If we're lucky, the only time we interact with insurance is when we purchase a vehicle and when we pay for it monthly or annually. In the event a mishap occurs and you need to file a claim, you could be in for a bit of a surprise if you don't pay attention to your car insurance policy's deductible.

What is a car insurance deductible? It's the amount of money you'll have to pay before your coverage kicks in. Deductibles are set by you and can range from a few hundred to a few thousand dollars. They can also be a percentage of the vehicle's value. For example, let's say you backed your car into a light post and the body shop wants $3,000 to repair it. If you have a $1,000 deductible, the insurance company will cover the remaining $2,000 after you cough up the deductible. 

Unlike health insurance, where your deductible likely accumulates over the year, vehicle insurance typically requires a deductible to be paid for each claim. That means if you have another collision a few weeks later that causes $5,000 in damages, you'll have to pay another $1,000 out-of-pocket and the insurance will cut a check for $4,000.