What is a deductible and how does it affect premiums?

A deductible is the amount you pay out of pocket for covered expenses before your insurance company starts paying. For example, with a $1,000 deductible, you cover the first $1,000 of a claim, and the insurer pays the rest. Deductibles and premiums have an inverse relationship. Choosing a higher deductible lowers your monthly premium because you're taking on more financial risk yourself, reducing the insurer's exposure. A lower deductible means the insurer starts paying sooner, so they charge higher premiums to offset that risk. The right balance depends on your financial situation and how likely you are to file a claim.