By Sabrina Karl

Many drivers find that one of the toughest decisions when buying auto insurance is choosing a deductible amount. That’s because there isn’t one best answer for everyone.

A deductible is the payment you have to make yourself whenever you file a claim for coverage on an incident. For instance, if you’re at fault in an accident and have a $500 deductible, you’ll need to cover $500 of the repair bill before your insurance company will pay the rest.

But $500 is just one option you can choose, with deductibles typically ranging from $0 to $1,000, or even $2,500. The reason insurers give you a choice is so that you can opt how to balance the cost of monthly premiums with how much you’ll pay in the case of a claim.

In short, if you want a very low deductible (little out-of-pocket expense if you file a claim), you’ll have to pay for that privilege with higher monthly premiums. On the flip side, you can save significant money on your premiums every month by taking on the risk of owing a higher amount should you file a claim.

A good way to decide is to ask insurers to quote different deductible amounts, so you can see where you’ll gain the most bang for your buck. For instance, moving from a $100 deductible to $500 may cut your premium by almost half, and moving to $1,000 could reduce premiums to almost a third. Meanwhile, the gains by going to a $2,000 deductible could be quite minimal.

A good strategy is to calculate the annual cost for premiums plus one claim for different deductible quotes, as well as your annual costs for premiums with no claims. Comparing these numbers for different deductibles can help you decide what feels like your own best choice.