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Car repair costs rose in 2023, partly due to a shortage of new cars and labor shortages, which is why collision and comprehensive insurance can be helpful. These coverages pay for your car repairs, even if you caused the damage. Insurance won’t cover everything — your policy likely has a deductible, which is the amount you’re responsible for paying out of pocket when you file a claim.
But what happens if you can’t pay the car insurance deductible? If you can’t pay it, you’ll have to find a way to make up the difference between what your insurance pays and repair costs.
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How a car insurance deductible works
If you have a $500 deductible and your repair costs are $2,000, you’d pay the initial $500 and your insurance company would cover the remaining $1,500. Generally, your insurance company subtracts the deductible amount from your claims payout. You’ll be responsible for paying the $500 directly to the repair shop.
You’ll have to cover the deductible for every comprehensive or collision claim you file. More expensive deductibles typically result in lower insurance premiums, but it means you’ll pay more when you file a claim.
What to do if you can’t pay your deductible
Deductibles can be expensive, and drivers may choose higher deductibles to lower their monthly car insurance costs. This may seem like a great way to save money at first glance, but it can make it hard to pay a deductible if you ever need to file a claim.
Job loss, other financial commitments, or just being short on cash can all make it hard to afford a deductible payment.
If you find yourself unable to pay, you have a few options:
If you can’t afford to pay your deductible to the repair shop in one lump sum right after an accident, you can ask if the car repair shop has payment plans. That way, the shop can start on repairs while you spread your deductible amount over multiple payments. Keep in mind, though, not every shop will allow payment plans.
Pull from savings or emergency funds
If you have money set aside for a rainy day, now’s the time to take advantage of your savvy planning. Pulling money from your savings account or emergency fund can make it a lot easier to pay your deductible out of pocket.
Ideally, you can avoid taking on debt to pay your deductible when you use emergency savings.
Ask your insurer about a deductible waiver
A deductible waiver is a type of insurance add-on you can buy in addition to your base auto policy that makes it possible to avoid paying a deductible. This can be especially beneficial in specific cases, such as accidents involving an uninsured driver.
Keep driving your car
If your car’s damages are purely cosmetic, you also have the option to not file a claim at all and keep driving your car without repairs. Again, you should confirm with a professional that the car is safe to drive after an accident, even a minor one. It’s up to you to make the final call on whether this is a good idea.
Take out a loan
If you don’t have the cash available to pay the deductible up front, you can consider taking out a personal loan as a last-resort option.
Just make sure you avoid predatory loans like payday loans with sky-high fees and interest rates. You can use traditional personal loan funds for almost any reason, and they tend to have lower interest rates than credit cards.
It’s crucial to choose a deductible that you can comfortably afford. Understanding deductibles helps you make informed decisions about your insurance coverage and financial responsibilities in case of accidents or damages.
Can you wait to pay your deductible amount?
You may be able to wait to pay your auto insurance deductible amount if you can arrange a payment plan or a delayed payment date with the mechanic or your insurer. You can always shop around with a few different mechanics to see who can offer you the most flexibility.
Most likely, you’ll need to pay at least part of the deductible in exchange for the mechanic starting repairs.
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How to set a deductible you can afford
When it comes time to choose your car insurance deductible, consider your financial situation carefully to balance setting a deductible you can afford with favorable car insurance premiums.
Ask yourself if you could easily pay $500 out of pocket in the near future if you ever have to file a claim. If you don’t think you could, then setting a $250 deductible may be the better option. You’ll pay a little more in your monthly car insurance premiums, but you won’t have a huge up-front cost when you file a claim.
But if a $500 or $1,000 deductible is feasible for you, then you could save on your car insurance premiums by raising your deductible.
Plus, if your insurance company offers a vanishing deductible, you could reduce the amount you pay out of pocket for every policy term you go claims-free.
Car insurance deductible FAQs
Knowing how car insurance works and what deductibles are can help you prepare for future insurance claims. Here are some more insights into how auto insurance deductibles work.
Can you lower your deductible after an accident, but before you file a claim?
You choose your deductible amount when you enroll in your policy, then your insurer prices your monthly or annual premiums accordingly. You typically can’t switch to a lower deductible until your policy renews since your premium prices are locked in for the year. This means when an accident happens, you’re stuck paying your original deductible.
Do you need to pay a deductible if you didn’t cause the accident?
If you weren’t at fault and the at-fault party’s insurance company accepted liability, you might not have to pay a deductible. In this case, the at-fault driver’s insurance should cover your repairs and other expenses. However, if the at-fault party is uninsured or underinsured, or if your insurance company covers the damages initially, you may have to pay your deductible. In no-fault states, it’s also common to pay a deductible even if you weren’t at fault.
Can you make payments on your deductible?
You may be able to negotiate a payment plan for your car insurance deductible with the repair shop, but it’s not a guarantee. If you need a payment plan to make paying your deductible financially feasible, you can shop around to see if a body shop in your area offers these plans.
What happens if you don’t pay your full deductible?
If you don’t pay your full deductible, your insurance company may refuse to cover the remaining costs of your claim. Auto insurance companies typically require policyholders to pay the deductible before processing the claim and covering any expenses. Failure to pay the deductible can lead to a denied claim, leaving you responsible for covering the entire cost of repairs, medical expenses, or other damages resulting from the incident.
During college, Jacqueline DeMarco interned at a retirement plan advisory firm and was tasked with creating a presentation on the importance of financial wellness. During her research into how money can affect our health, relationships and career, Jacqueline realized just how important financial education is. Jacqueline is a contributor for Insurify and has worked with more than a dozen financial brands, including LendingTree, Capital One, Credit Karma, Fundera, Chime, Bankrate, Student Loan Hero, ValuePenguin, SoFi, and Northwestern Mutual, providing thoughtful content to give readers insight into complex topics that they likely didn’t learn in school.