Auto insurance is a contract between a policyholder and an insurance company that provides financial protection in the event of an accident, theft, or damage to a vehicle. It helps cover the costs of repairs, medical expenses, and other liabilities.

Auto insurance coverage typically includes liability coverage, which pays for damages and injuries to others if you are at fault in an accident. It may also include collision and comprehensive coverage, which pay for damages to your own vehicle.

Collision coverage pays for damages to your vehicle if you collide with another car or object, regardless of who is at fault. Comprehensive coverage pays for damages to your vehicle caused by events such as theft, vandalism, fire, or natural disasters.

A deductible is the amount of money you must pay out of pocket before your insurance coverage kicks in. For example, if you have a $500 deductible and incur $1,000 in damages, you would pay $500 and the insurance company would cover the remaining $500.

Generally, the higher your deductible, the lower your insurance premium will be. This is because you are assuming more of the financial risk in the event of a claim. However, it’s important to choose a deductible that you can comfortably afford to pay out of pocket.

Several factors can influence the cost of auto insurance, including your age, driving record, the type of vehicle you drive, where you live, and the coverage options you choose. Insurance companies also consider statistical data and actuarial tables to determine risk and pricing.