Dear HKB, You sure ask some tough questions!
Well, here goes:
In the US the law requires that all cars and drivers must have insurance. There are two types of insurance, collision insurance pays for the repair of your own car, and liability insurance pays for the repairs and medical bills of the other car or cars involved in the accident. The law only requires you to have liability insurance, but almost everyone has some amount of collision insurance also. The deductible is the part of the (collision) insurance claim that the insured person must pay from his own pocket. Here is an example:
You own a 2002 toyota that is worth $10,000. You have collision insurance with a $100 deductible. If your car receives damage which the insurance company judges will cost $500 to repair, they will give you $400 (your $500 loss minus the $100 deductible). If the car were totally destroyed the insurance company would pay you $9,900 (the value of the car less your deductible).The insurance company may charge you $400 per year for this insurance (on top of whatever they are charging you for liability insurance). If you wish to pay less for insurance you can choose a higher deductible, $200, $500, $1,000 or more. If you had a $5,000 deductible you might have to pay only $200 per year. Because you are assuming more of the risk yourself, the company will charge you less for the insurance.
If the deductible on your ride (car) is $25,000 that means you will pay the first $25,000 in repairs to your car out of your own pocket. Essentially, you are only buying the liability insurance that the law requires (little pink slip). $1,400 per year would be cheap for some people. A "killer deductible" would be one that would kill you if you had a claim (like the above-mentioned $25,000).
Yes, you correctly surmised what the "other planet" remark is about.