Personal Finance Basics — Paying a little now to avoid a catastrophic bill later.
Insurance is how you trade a small, predictable cost for protection against a rare but huge one. You pay a little regularly so a disaster does not wipe you out.
Premium: The recurring amount you pay (often monthly) to keep a policy active.
Deductible: The amount you pay out of pocket on a claim before insurance starts covering the rest.
Plans with lower premiums usually have higher deductibles, and the reverse. The right balance depends on how likely you are to need the coverage and what you could afford in a claim.
Liability insurance covers harm you cause to others, which is why it is legally required for drivers in most places.
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