What’s a Car Insurance Deductible?


WRITTEN BY: Julia Matseikovich

UPDATED: AUGUST 09, 2022 | 1 MIN READ

A deductible is the amount of money a person has to pay before their insurance kicks in. A car insurance deductible is the amount of money you must pay before your insurer starts paying for your car repairs.

How Do Car Insurance Deductibles Work?

When you purchase your auto insurance, you choose the deductible you’d like. In most cases, deductible options range from $0 to $2,500. Although, $500 and $1,000 are the more popular options.

The deductible is your out-of-pocket expense when you file a claim. You pay your deductible and then, your insurance company pays the remaining cost. It’s important to remember, for most car insurance policies, your deductible only applies to comprehensive and collision coverage.

Auto insurance deductible examples

For example, if you have a $500 deductible and an accident occurs where damages cost $1,000, you would only need to pay $500 out-of-pocket for repairs. On the other hand, if your deductible is set at $1,000, based on our previous example of damage costs ($1,000), you would have to pay for all repairs. This will not apply if your car insurance policy includes no-deductible coverage.

Which Car Insurance Coverages Have a Deductible?

There are three types of insurance: collision, comprehensive, and liability. Collision and comprehensive coverages both have deductibles. Liability only covers injuries or damages to other drivers, so it does not carry a deductible.

Types of car insurance

Liability insurance only covers injuries or damages to other drivers. Full-coverage car insurance includes collision and comprehensive coverages.

Collision insurance and comprehensive coverages both have deductibles. Comprehensive coverage covers all damages that weren’t caused by a collision, such as hail damage, vandalism. and theft. Collision coverage typically helps pay for damage to your car and the other driver’s car in a crash with your vehicle.

You will usually have to pay a separate:

  • collision deductible
  • comprehensive deductible

How Do Car Insurance Deductibles Affect Your Premiums?

Car insurance deductibles don’t affect your premium much. Basically, the higher your deductible, the lower your premium. So if you have a $500 deductible you’ll pay a higher premium than you would if you had a $1,000 deductible.

Higher deductibles, lower premiums

Choosing a higher deductible will result in lower insurance rates. But, this comes at a cost. When you choose a higher deductible, you are responsible for all or most of any expenses before the insurance company starts to chip in and help pay the bills. This means that you may need to make sure you have a large enough emergency fund to cover any payout you need to make in the case of an unexpected claim.

Lower deductibles, higher premiums

If you can afford to pay higher premiums each month, you may be able to arrange a lower deductible with your insurance agent. This is an excellent choice for people who can pay more each month but may not be able to cope with having a larger unexpected payout to deal with.

When Do You Pay a Car Insurance Deductible?

You don’t always have to pay a car insurance deductible. Your deductible only applies to your comprehensive and collision coverage, in most cases. In some states, there’s also a deductible for the medical payments add-on coverage.

Do you pay a deductible if you hit a car?

If you’re in an at-fault accident or you damage someone’s property, your liability coverage, specifically property damage, pays the costs. In most cases, you don’t have a deductible for this portion of your policy, so you wouldn’t have to pay one.

Remember, there are always exceptions. You should check the details of your policy to be sure.

Do you pay a deductible if you’re not at fault?

If you’re in a car accident that’s the other driver’s fault, you don’t have to pay a deductible because the other driver’s car insurance company handles the claim. After a car accident, the police and claims adjusters usually determine who is at fault.

Situations where you don’t pay a deductible

The following are situations where you don’t have to pay the deductible for your car insurance:

  • If you’re in a car accident, and it’s not your fault, you don’t have to pay a deductible.
  • It’s also not necessary if someone else causes an accident that injures you.
  • You won’t have to pay if someone files an insurance claim against your liability coverage.

FAQs

Is it better to have a $500 car insurance deductible or a $1,000 one?

This is a question that many drivers ask themselves when they are considering purchasing car insurance. The answer to this question will depend on your personal preferences, the value of your car, how often you drive, and where you live. A $500 deductible means you will have to pay the first $500 in repair costs, whereas a $1,000 one means you will have to pay the first $1,000 in repairs. However, if your car is worth more than $500 or $1,000, it might be better for you to purchase a higher deductible. Generally, this will save you money on insurance premiums.

How much can I save by switching to a higher deductible?

You can save on your car insurance premium by switching from a low to a high deductible. This varies by insurance company provider. Most people will likely save at least 10% and, in some cases, save as much as 30% by upping their deductible amount.

What’s the maximum deductible for car insurance?

The insurance company determines the maximum deductible, typically $1,000 or $2,500.

What’s the best car insurance deductible?

A higher deductible will lower your monthly premiums. This is because the insurance company is taking on a more significant share of the risk. The trade-off is that you’ll need to pay more out-of-pocket upfront if you have an accident. If you’re a safe driver, considering a higher deductible for your car insurance policy might be worth it.

When I get a new car, will my car insurance deductible go up?

When you purchase a new car, your auto insurance company usually asks for an updated vehicle value. This is so they can update your policy and account for the increased value of your vehicle. When you submit this information, they may also ask for updated information on your chosen coverage. If the value of your new car is drastically different from your old vehicle, your car insurance company may ask you to increase your deductible.

Choose a Car Insurance Deductible For Your New Policy

Car insurance deductibles are one of the most important factors when choosing a car insurance plan. The average car insurance deductible is $500. If you have an accident and need to file a claim, you must pay $500 before your car insurance company starts paying for damages.

Always make sure you compare auto insurance quotes. Also, take into consideration coverage limits and covered damages, as well as the car insurance deductible.