17+ years in insurance and personal finance writing
In-depth knowledge of home and real estate topics
Angela is an insurance and personal finance expert who uses her experience to create content that helps readers understand important and complex topics.
7+ years in business and financial services content
Chris is a seasoned writer/editor with past experience across myriad industries, including insurance, SAS, finance, Medicare, logistics, marketing/advertising, and many more.
Konstantin has led data teams across multiple industries, including insurance, travel, and biology. He’s led Insurify’s engineering team for more than three years.
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When you purchase an auto insurance policy, you can choose your level of coverage and your deductible. The deductible is the amount of money you pay out of pocket in the event of a car accident or other claim.
If you choose a smaller deductible, you’ll pay less out of pocket after an accident, but your premium will cost more. If you choose a higher deductible, you’ll be responsible for more costs after an accident, but you’ll usually pay a lower premium.
Some companies also offer a no-deductible car insurance option. This means the insurance company covers the cost incurred from all damages in an accident. Here’s what you should know about no-deductible car insurance.
Quick Facts
A no-deductible policy may sound appealing because you don’t have to pay out of pocket before your insurance company covers a claim. However, you can expect to pay a higher premium up front.
In some cases you may choose not to file a claim because it could raise your premium.
No-deductible car insurance could be a good idea if you have significant room in your budget, drive an expensive car, or have an increased risk of an accident.
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How auto insurance deductibles work
Suppose a rock cracks your windshield, and the replacement cost is $600. If you have a $250 deductible, you only pay that amount. Your insurance covers the remaining $350.
If you’re familiar with health insurance deductibles, auto insurance deductibles are a similar concept, with one significant difference: Health insurance deductibles reset annually. Once you meet that deductible, you don’t have to pay the deductible again until the following year.
But car insurance deductibles reset for each claim. If you have a claim for a broken windshield in January and a parking-lot fender bender in May, you’ll pay your deductible twice — once for each claim.
How no-deductible car insurance works
When you opt for no-deductible car insurance, your insurance company pays the full cost of the covered damages. For example, if you need to replace your windshield because of rock damage and you have no-deductible coverage, the insurance company would cover the entire cost of replacing the windshield.
When you purchase a zero-deductible car insurance policy, you’re telling the insurance company to accept all financial risk in the event of a loss. Deductibles act as a way to share risk with the insurance company, and if you opt for a zero-deductible policy, you can expect to pay a higher premium to offset the increased risk for the insurer.[1]
Good to Know
It’s also possible to have multiple deductible options on one policy. For example, you might choose no-deductible coverage on your glass and mirrors but a $1,500 collision deductible.
You pay your deductible when you file a claim, and you have a set deductible for the damages included in the claim. For example, if you back your car into a light post and have a $1,500 deductible, you’d be responsible for paying up to $1,500 of the total repair costs. Once you file a claim with your insurance company, it’ll provide a list of approved repair shops. Once the repair shop offers you a quote, you’re responsible for your deductible, and the insurance company covers any remaining balance.
Deductibles apply to every claim. Your deductible isn’t limited to the annual deductible amount but per incident.
How to decide if the damage is worth filing a claim
Having a deductible allows you to decide if filing a claim is worth the effort or if it’s less expensive to pay for the repairs yourself. For example, if your claim is simple — like replacing a windshield — it might be easier and cheaper to pay for it yourself rather than filing a claim with the insurance company because filing a claim could increase your premiums going forward.
Example
However, suppose a tree fell on your car and caused $6,000 in damage. You may be relieved to pay just $500 and let the insurer pay the remaining $5,500 for repairs.
How to choose your deductible amount
Insurance companies offer different types of coverage and deductibles. Choosing the cost of your deductible depends on your needs and the company you choose to work with. Deductibles are split into two categories: high and low.
A high deductible means you’re responsible for paying more of the repair costs up front, but your premium is usually lower because you’re taking on more financial responsibility. If you opt for a low deductible, you’ll pay more for your premium, but you’ll pay less for repairs following an incident.
Choosing your deductible is one of the most significant factors determining your premium cost. While it’s tempting to instantly choose a low- or no-deductible option to save money if you’re in an accident, there are some things you should consider. Here are a few questions to ask yourself and your insurance agent to choose the right deductible:
What is your risk of an accident or incident? Do you drive a lot or regularly commute in bad weather or heavy traffic?
Can you afford to pay out of pocket if you’re in an accident?
How much are you willing to spend out of pocket?
Could you realistically save up an emergency fund before an incident?
What’s the value of your vehicle?
What’s the difference in premium between your deductible options?
If you have a loan on your vehicle, does your lender require a specific deductible?
Do you need a deductible for medical coverage in an auto accident?
Some states have a required minimum deductible for certain types of claims. Common restrictions on no-deductible coverage include personal injury protection and uninsured motorist property damage coverage.
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No-deductible insurance pros and cons
If you’re trying to decide whether purchasing no-deductible insurance is the right fit for you, it can be helpful to consider the pros and cons of this type of coverage.
Pros
You won’t have to worry about whether you can afford to replace your car or make repairs if you’re in an accident.
You can select which items you want to include in no-deductible coverage and what you’ll pay a deductible for, so you have more flexibility.
Cons
Premiums for no-deductible policies are more expensive.
No-deductible options come with restrictions in some states. South Carolina, for example, doesn’t apply the same no-deductible options to tempered glass (car door windows) as it does to safety glass (your windshield).[2]
Who should consider no-deductible car insurance?
No-deductible car insurance could be a good idea for you if you fall into any of these groups:
Drivers with room in their budget: If you have wiggle room and can afford the higher premiums, a zero-deductible policy could help you avoid unexpected large expenses following an accident.
Drivers with an expensive vehicle: Some vehicles are more expensive to repair or replace than others. If the cost to repair the vehicle is prohibitive, a no-deductible policy can provide some breathing room in the event of an accident.
Drivers who have a higher risk of an accident: Since you have to pay a deductible every time you file a claim, it may be more affordable to invest in a no-deductible policy if you’re at a higher risk for accidents or incidents.
How to lower car insurance costs
The type of deductible you choose isn’t the only way for you to save money on your insurance costs. Here are a few other tips to lower your insurance premiums:
Bundle home and auto coverage. Many insurance companies offer discounts for policyholders that combine multiple policies, likeauto and home. Even if you don’t own a home, you can use this to bundle renters and auto coverage or your auto and specialty vehicle policies.
Take advantage of safe driving programs. Many insurance companies offer discounts for utilizing safe driving habits. You may need to install a monitor in your car so the company can track your speed, stopping, and turning habits.[3]
Compare rates from multiple companies. When purchasing auto insurance, the simplest way to get the best price is to look at your options. Compare ratesfrom at least three different insurers to get the best price for the coverage package.
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Alternatives to no-deductible car insurance
Not everyone can afford the high cost of a no-deductible policy. Luckily, you have alternatives to consider when shopping for auto insurance coverage.
High-deductible policies
Consider a high-deductible policy if you’re comfortable taking on more risk but don’t want to pay the steep price of no-deductible coverage. If you do pursue this route, make sure you can afford to pay this higher deductible if you ever need to file a claim.
Low-deductible insurance
A low-deductible car insurance policy may be better if you don’t have enough immediate cash to pay a higher deductible. It’s also a good option if you have a higher chance of getting in an accident or filing a claim.
Vanishing deductibles
Some insurance companies offer vanishing deductibles. This “deductible reduction” is available to safe drivers who don’t have a history of filing claims. With a vanishing deductible, the insurer rewards you for maintaining a good driving record and not filing claims by reducing your deductible by $50, $100, or more per year.
For example, suppose you have a $500 deductible. If you drive safely for three years but then have an accident, your insurer might only require you to pay $200 instead of the total deductible amount of $500. This is because your vanishing deductible reduced your rates by $100 for each year of safe driving.
No-deductible car insurance FAQs
If you still have questions regarding no-deductible car insurance, you can find the information you need below.
When do you pay a car insurance deductible?
Unless you have a no-deductible policy, you may only pay a deductible if you file a collision or comprehensive insurance claim. For example, you’ll pay your deductible if you hit an animal and damage your car or are involved in an accident with another vehicle.
What does ‘no deductible’ mean on car insurance?
No-deductible car insurance means you don’t have to pay a deductible when filing a claim. When buying the policy, you typically choose a deductible amount. But no-deductible coverage sets the deductible to $0.
How do you avoid paying your auto insurance deductible?
The most straightforward way to avoid paying a collision or comprehensive deductible is to set up a no-deductible policy. Other times, you may not have to pay if your policy waives the deductible for circumstances like auto glass repair or if you weren’t at fault in an accident.
Is a higher deductible better for car insurance?
Higher deductibles allow you to save money on car insurance premiums. The best way to manage car insurance with a higher deductible is to set aside the funds to cover the deductible in case of an emergency repair or auto insurance claim.
Is a $0 deductible good?
A no-deductible policy can be a good choice for some coverages. However, the higher premium cost can be difficult for some consumers to afford. You should weigh your risks, benefits, and costs to determine if it fits your needs.
Angela Brown is a freelance writer with 17 years of professional writing and editing experience. She specializes in finance, real estate, and insurance content. Angela uses her experience to create easy-to-understand content that helps consumers understand tough topics better. When she’s not working, she enjoys spending time with her family and planning vacations.
7+ years in business and financial services content
Chris is a seasoned writer/editor with past experience across myriad industries, including insurance, SAS, finance, Medicare, logistics, marketing/advertising, and many more.
Konstantin has led data teams across multiple industries, including insurance, travel, and biology. He’s led Insurify’s engineering team for more than three years.
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