What Is a Car Insurance Deductible?

When you file a claim, you may have to pay a certain amount toward repairs before your insurance kicks in.

Jamie Johnson
Written byJamie Johnson
Jamie Johnson
Jamie Johnson
  • 6 years experience in personal finance writing

  • Featured on Credit Karma and Insider

Jamie is a meticulous researcher who has published 2,000+ personal finance articles. Her expertise is trusted by major brands like Bankrate and Rocket Mortgage.

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Evelyn Pimplaskar
Evelyn PimplaskarEditor-in-Chief, Director of Content
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Evelyn leads Insurify’s content team. She’s passionate about creating empowering content to help people transform their financial lives and make sound insurance-buying decisions.

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Updated March 25, 2024

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A car insurance deductible is the amount of money you’ll pay out of pocket when filing an insurance claim. Once you pay the deductible, your insurer will cover any remaining car repair expenses, up to your coverage limit.

Both collision and comprehensive insurance require deductibles, and you’ll choose the deductible amount when you first apply for the auto insurance policy. The higher your deductible, the lower your insurance payout will be.[1]

But a higher deductible does lower your monthly insurance premiums, which can help you save money. If you’re comparing car insurance quotes, it’s important to learn how deductibles work.

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Rates shown are real-time Insurify user quotes from 100+ insurance companies and Quadrant Information Services data. Insurify’s algorithm excludes anomalous quotes and anonymizes personal details, then displays refined quotes by price, date, and insurer popularity up to 10 days ago from March 25, 2024. Actual quotes may vary based on the policy buyer’s unique driver profile.

How car insurance deductibles work

When you file an insurance claim, your deductible is the amount your insurer will subtract from your insurance payout. Car insurance deductibles are usually a set amount.

For example, let’s say you back into a light pole, causing $2,500 in covered damage to your car. Imagine you have a collision deductible of $1,000, which is a relatively high deductible. After subtracting your deductible amount from the payout amount, your insurance company sends you a check for $1,500.

In comparison, if your deductible were only $500, you’d receive an insurance payout of $2,000.

When you have to pay a deductible

Here are some common scenarios when a deductible would apply:

  • You cause an accident that results in damages to your vehicle.

  • You have to use PIP insurance to pay for your medical expenses after a car accident.

  • You have to use comprehensive coverage to pay for damage to your car.

  • You’re involved in an accident where the fault is shared among both drivers.

When a deductible doesn’t apply

Here are some scenarios when a car insurance deductible doesn’t apply:

  • If the other driver is found at fault for the accident, their liability coverage will pay for damage to your vehicle.

  • If you file a claim with your liability insurance, a deductible isn’t required.

  • A deductible won’t apply if you have a zero-deductible policy or a diminishing deductible endorsement on your car insurance policy.

  • Some insurance companies will waive the deductible if you have to repair your car windshield rather than replace it.

  • Some states and insurance companies will waive the deductible if an uninsured or underinsured motorist hits you.

What Is Uninsured Motorist Coverage, and Do You Need It?

What Is Uninsured Motorist Coverage, and Do You Need It?

Types of auto coverage with deductibles

Not all types of auto insurance require paying a deductible. A deductible is only required if you file a claim under one of the following types of coverage.

  • illustration card https://a.storyblok.com/f/162273/x/169fdfde11/liability-coverage.svg

    Collision coverage

    Collision insurance pays for damage to your vehicle if you cause an accident with another car or object. For example, collision insurance kicks in to repair your car if you accidentally run into your neighbor’s mailbox.[2]

  • illustration card https://a.storyblok.com/f/162273/x/665da91bf7/comprehensive-coverage.svg

    Comprehensive coverage

    Comprehensive coverage is often referred to as “other than collision insurance” since it pays for damage from non-collision events. It pays for vehicle theft and damage from hitting an animal, vandalism, natural disasters, and falling objects.

  • illustration card https://a.storyblok.com/f/162273/x/4c9753bdbe/medical-payments.svg

    Personal injury protection coverage

    Personal injury protection (PIP) reimburses you for medical expenses and lost wages resulting from an accident. It also pays for the cost of rehabilitation services and funeral expenses.

  • illustration card https://a.storyblok.com/f/162273/x/5285c4cd74/uninsured-or-underinsured-motorist-coverage.svg

    Uninsured/underinsured motorist coverage

    Uninsured motorist coverage pays for damage from an accident with another driver who doesn’t have car insurance. Underinsured motorist coverage kicks in if the other driver has insurance but their policy limits don’t cover the full extent of your damages.

How your deductible affects your car insurance premium

Deductibles don’t just affect your insurance payouts after an accident — they also help determine your monthly premiums. A deductible is how you share risk with the insurance company.

A higher deductible means you’re taking on more risk, so you’ll pay a lower premium. A lower deductible means you’re taking on less risk, so you’ll pay a higher premium.

What if your deductible amount exceeds repair costs?

In some cases, your deductible may exceed the necessary repair costs. For example, let’s say your windshield needs to be replaced, and the estimated cost is $500. If you have a $1,000 deductible, you won’t want to file a claim since your insurer won’t pay anything for the repair.

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How to choose a car insurance deductible amount

Since your deductible amount affects your monthly premiums, you want to think carefully about what to choose. Typical deductible amounts are $250, $500, and $1,000, with a $500 deductible being the most common.[3] 

Here are some factors to consider:

  • Your financial situation: Choosing a $1,000 deductible can help you save money on car insurance, but make sure you can afford to pay that if you’re involved in an accident. If you can’t, you may want to consider a lower deductible.

  • Your driving habits: It’s important to consider how likely you are to file a claim and whether you have a history of claims due to poor driving.

  • Your car’s value: If your car is worth less than $1,000, you may not need comprehensive or collision insurance since any claim won’t be higher than the car’s value.

When to adjust your deductible amount

You can change your deductible amount at any time, and your insurer will adjust your premiums accordingly. That’s because as your situation changes, you may need to make changes to your policy. For example, if you buy a higher-value car, you may want to increase your insurance coverage and lower your deductible.

What is a vanishing deductible?

Some insurance companies offer a reduced deductible for each year you go without an accident. Allstate and Liberty Mutual offer vanishing deductibles, but not all insurance companies do. And many don’t advertise this benefit, so you’ll have to do your research.

No-Deductible Car Insurance: Is It Right for You? (2024)

No-Deductible Car Insurance: Is It Right for You? (2024)

Car insurance deductible FAQs

A car insurance deductible determines your insurance payout after filing a claim — here’s some additional information about deductibles.

  • What happens if you can’t afford your deductible?

    If you can’t pay your deductible, your insurer may decide it won’t pay out on your claim until you cover the amount. Other insurers may issue a payout to your repair shop. In both cases, you’ll need to find a way to cover the deductible before you can get your car fixed. You may be able to negotiate a payment plan with the repair shop.

  • Does a deductible apply when you’re not at fault for an accident?

    If the other driver’s liability insurance pays for your damages, your deductible won’t apply. Liability coverage doesn’t have a deductible amount. Deductibles come into play when you file a claim under your own insurance’s comprehensive or collision coverages.

  • What is a good deductible for car insurance?

    That depends on your financial situation, your level of risk, and the value of your car. For example, if you have a generous emergency fund, it may make sense to choose a $1,000 deductible to save money on your premiums.

  • What is a diminishing deductible?

    A diminishing deductible — also known as a vanishing deductible — decreases each year you remain accident-free. For example, it could decrease by $100 per year. Not all insurers offer diminishing deductibles.

  • What is a collision deductible waiver?

    A collision deductible waiver allows you to waive your collision deductible if you have a qualifying claim. For example, if another driver hits you and you have to file a collision claim, you may not have to pay your deductible.

Sources

  1. Insurance Information Institute (Triple-I). "Understanding your insurance deductibles." Accessed February 15, 2024
  2. National Association of Insurance Commissioners. "2019/2020 Auto Insurance Database Report." Accessed February 15, 2024
  3. Liberty Mutual. "Car insurance deductibles: Frequently asked questions (FAQs)." Accessed February 15, 2024
Jamie Johnson
Jamie Johnson

Jamie Johnson is a Kansas City-based personal finance writer whose work has been featured on several of the top finance and business sites in the country, including Insider, Credit Karma, Bankrate, Rocket Mortgage, Fox Business, Quicken Loans, and The Balance. For the past six years, she's dedicated more than 10,000 hours of research and writing to more than 2,000 articles about personal finance topics.

Evelyn Pimplaskar
Edited byEvelyn PimplaskarEditor-in-Chief, Director of Content
Evelyn Pimplaskar
Evelyn PimplaskarEditor-in-Chief, Director of Content
  • 10+ years in insurance and personal finance content

  • 30+ years in media, PR, and content creation

Evelyn leads Insurify’s content team. She’s passionate about creating empowering content to help people transform their financial lives and make sound insurance-buying decisions.

Featured in

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