When you purchase an extended car warranty, or extended service contract, it often come with a deductible. A deductible on an extended warranty works the same way your deductible on your car insurance works. When you take your vehicle in for repairs, you pay the deductible, whatever the cost maybe, and then warranty company will pay for the rest of the repairs as long they are covered by the warranty. Many extended car warranty companies allow you to choose your deductible amount. Sometimes, you can even choose to have no deductible. But, just like with car insurance, the lower your deductible, the higher the cost of the plan. If you choose a higher deductible, then the plan itself won't cost as much as if you chose the lower deductible, but then you will have to pay more at the repair shop. Ultimately, the choice is up to you. It is all about what you are comfortable paying, both when you purchase the plan, and at the repair shop.