What is the car insurance deductible?
A car insurance deductible is the maximum amount you'll pay out of pocket if you're at fault in an accident. Each type of auto insurance comes with a different deductible, and you'll find your specific amounts on your insurance card and policy declarations page. The higher your deductible, the lower your rates will be, but you'll have to pay much more if you cause a wreck.
Free Auto Insurance Comparison
Secured with SHA-256 Encryption
|
Written by
Leslie Kasperowicz
|
|
Reviewed by
Daniel Walker
|
UPDATED: Apr 29, 2022
It’s all about you. We want to help you make the right coverage choices.
Advertiser Disclosure: We strive to help you make confident auto insurance decisions. Comparison shopping should be easy. We are not affiliated with any one auto insurance provider and cannot guarantee quotes from any single provider. Our partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.
Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.
- Your car insurance deductible is the max you’ll pay out of pocket before your car insurance kicks in to cover damages to your vehicle
- Each type of coverage has its own deductible, and some have no deductible at all
- How high or low of a deductible you choose for car insurance will have a big impact on your rates
In the event of an auto insurance claim, you’ll want to know the definition of a car insurance deductible. The deductible represents your portion of the cost that you pay an insurance company. It’s typically a fixed-dollar amount, and you’ll pay a deductible when you incur a claim that falls under certain coverages in your auto insurance policy. Deductibles and the coverages to which they apply may look different depending on your state of residence.
Here’s everything you need to know about what deductibles mean when you’re dealing with car insurance.
Table of Contents
Are there different types of car insurance deductibles?
An auto insurance deductible could apply to incidents that involve a collision or accident in which your car runs off the road or strikes another vehicle or object. The dollar amount you’re required to pay could be different with a comprehensive claim, which might occur if you collide with a deer or discover a cracked windshield. You may even pay a different deductible before receiving payments on personal injury or underinsured and uninsured motorist coverage claims.
It’s important to understand how an auto insurance deductible works before you select the applicable coverages on your auto insurance policy. This knowledge will be beneficial if you ever need to file a claim.
Free Auto Insurance Comparison
Enter your ZIP code below to view companies that have cheap auto insurance rates.
Secured with SHA-256 Encryption
Should you have a high or low car insurance deductible?
Whether you choose a low or high deductible depends on personal preference and budget considerations. The level of deductible you select will affect policy rates. As a general rule, with all other coverages staying the same, a higher collision deductible will lower your auto insurance premium. Conversely, a lower deductible will increase your premium cost.
Look at your household budget to determine the amount you have set aside for auto insurance. Raising or lowering a deductible may help you keep your policy cost in line. But be sure you have funds available to cover a deductible payment in the event of a claim.
Average Car Insurance Deductible
The average car insurance deductible ranges between $100 and $2,500. The most common average deductible for collision and/or comprehensive coverage is $500. Yet, your choice of how large of a deductible you’re willing to pay will depend on your individual situation.
Whether you go low or high on the deductible could hinge on who is insured under the policy. Auto policy rates correspond to how likely a driver is to be involved in an accident. So, younger and less-experienced drivers will face higher rates than would a driver who’s been licensed for 30 years and has no recent accidents or violations.
Based on poor driver experience and lack of funds to cover the cost of an accident, you might choose a higher deductible to ensure you won’t get hit with high rates. On the opposite end, a driver in their 40s with a solid and safe track record might choose a low deductible since they have already earned lower rates.
It’s also worth noting that some carriers might allow you to choose a zero-dollar deductible, which will represent the highest policy cost but spare you an out-of-pocket expense if a claim occurs.
Naturally, you’ll want to weigh the costs and benefits of deductible levels. By accepting more financial risk through a higher deductible, you’ll pay less money. But, you’ll need to dig a little deeper for a deductible payment if there’s a future collision or comprehensive claim.
The Claims Process and Your Deductible
To understand when you pay the deductible for car insurance, consider a hail storm that results in dents or paint chips on your car’s exterior. That type of incident falls under comprehensive coverage, where the cause of the damage is an act of nature. If that damage amounts to $2,000, you might be required to pay the first $100 of the repair cost. Alternatively, if you choose a $250 deductible, the insurance company’s responsibility amounts to $1,750.
You may run into a situation in which a minor fender-bender results in damage that costs less than your deductible amount. In this case, submitting a claim to your insurance carrier isn’t prudent because you’d pay that cost through your deductible. Your best bet may be to pay for the repair yourself without submitting an insurance claim.
Free Auto Insurance Comparison
Enter your ZIP code below to view companies that have cheap auto insurance rates.
Secured with SHA-256 Encryption
Compare Car Insurance Deductibles and Rates
When it comes to understanding how a car insurance deductible works, it’s wise to educate yourself as much as possible. Read your policy and ask questions of your carrier so that you can minimize any financial harm in the event of a car accident or comprehensive claim.