Once you’ve determined what coverage is required by your state and what coverage you’d like to add onto your “order,” you’ll need to understand the difference between your premium and your deductible. Your premium is the amount your insurance costs annually. It’s a combination of the types of coverage you want combined with information from your driving record. If you’re what’s seen as a “risky” driver by your insurance company (think previous accidents or tickets), your premium will likely go up. Most people pay their insurance premium on a monthly basis.
Some of your coverage might be subject to a deductible. Just like health insurance, it’s an annual amount that you’re responsible for before your insurance steps in and pays the rest. If you have a $500 deductible for your collision insurance, for example, and you drive into your garage door, you’ll be on the hook for $500 of the repairs before insurance pays anything else. If you have another accident later in the same year, however, and you’ve already met your deductible, you won’t have to pay it again.