Insurance is meant to protect you from real financial disaster, not bee stings and pin pricks, and that should be your standard as you're considering deductible levels. A deductible of $1,000 sounds high, but if in an emergency you could scrape together such a sum, you should consider it. After all, higher deductibles mean lower premiums. If, on the other hand, a $1,000 expenditure could make or break your standard of living, then perhaps you should consider a deductible of $500 or even $250.

Here's an example: you purchase a policy with a $250 deductible, which costs about $200 more per year than a policy with a deductible of $1,000. Over the course of 10 years, you pay an extra $2,000 for the additional coverage. In that time, you get into two small fender-benders and one major accident. The fender-benders cost $500 each, so your policy saves you $250 compared with the $1,000 deductible. That's a total savings of $500. In the major accident, which costs more than $1,000, you only pay the first $250 instead of $1,000--a difference of $750. Overall, the additional coverage saves you $1,250, yet you've paid more than $2,000 for it. So in this example, you would have been better off with the less expensive high deductible.

Of course, individual costs vary, as well the kinds of claims you make. But most consumer affairs experts agree that high deductibles usually make financial sense over the long run.