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Compare car insurance deductibles
How much deductible can you afford and how does it affect insurance claims?
Choosing a car insurance policy can be a complicated and overwhelming task, made no easier by the use of technical jargon and special insurance terms. One term in particular that causes confusion for many drivers is a deductible — the amount you’ll pay before you get coverage.
What is a car insurance deductible?
The car insurance deductible is the amount you’re required to pay when you make a car insurance claim. In other words, it’s the amount you contribute toward the cost of an accident, with your insurance company covering the leftover amount.
For example, if your policy has a $500 deductible and you make a claim for $3,000 worth of damage to your car, you’ll cover the first $500 of the repair costs and the insurer will foot the bill for the remaining $2,500.
How much is my car insurance deductible?
Most people choose a car insurance deductible amount of $250, $500 or $1,000. You set this deductible when you buy your policy, though your insurance company may set it automatically to a common amount like $500 if you’re buying online.
You can choose from the following deductible amounts:
- $100
- $250
- $500
- $1,000
- $1,500
- $2,000
You can change your car insurance deductible at any time, though you might opt to adjust it right before your policy renews. If you change during the policy period, you may get a partial refund for raising your deductible or pay extra for lowering it. Just make sure you’re able to cover the full amount in the event of a claim.
How to find your car insurance deductible
The simplest way to find out your deductible amount is to check online.
- Simply log in to your customer account and find the coverage section of your policy.
- Look for the deductible listed under each type of coverage. You won’t see a deductible for liability or roadside service since you won’t pay a deductible when making a claim for these.
- You can call customer support if you have more questions or want to change your deductible. Only a few companies let you change your deductible online.
How to choose your car insurance deductible
Insurance companies allow you to choose a deductible that suits your financial situation and the amount of risk you want to take on. Your deductible will determine how much you pay in monthly premiums and your personal costs of repairing your vehicle after an incident, so it’s important to choose wisely.
1. Look at your personal savings.
If you have a large emergency fund or a big chunk of savings, you may want to consider a higher deductible. In doing so, you may be able to decrease your monthly payments at the cost of a steeper up-front fee if you were to file a claim.
If you can afford the out-of-pocket expense, you may be able to save more money in the long run.
2. Consider a lower deductible for low-value vehicles.
You may want to adjust your deductible according to the cost of your vehicle. If you’re driving an older vehicle that costs less to repair, it doesn’t make sense to set a deductible that costs more than potential repairs or replacement.
Your deductible shouldn’t be worth more than your car’s value. If it is, you wouldn’t receive any payout in the event of a claim. Likewise, if only one or two premium payments plus your deductible will outpace the value of your car, it may be worth canceling comprehensive and collision coverage and saving the money on your own.
However, repairing a high-end or new vehicle may cost more, making it more likely that you’ll use your coverage even with a higher deductible like $1,000.
3. Compare how different deductibles affect monthly payments
As you may know, a higher deductible may lower monthly premiums, helping you save money if you don’t file many accident claims. However, balance the lower rate with the amount of coverage you’re getting to see if the extra monthly cost is worth it.
For example, if you’re only receiving a $5 discount on your monthly premiums in exchange for a $500 increase in deductible, you may want to reconsider.
4. Think about how likely you are to make a claim.
If you’re an inexperienced driver or live in an area with a high number of collisions, driving may pose a higher risk to your vehicle. If there’s a higher likelihood of you getting into an accident or having your car damaged, it may be a good idea to opt for a lower deductible in case something happens. While your premiums may be slightly higher, you’ll be paying less out of pocket when you file a claim.
Also, look at the type of coverage when setting the deductible. If you live in a densely populated area, you might want a lower deductible on collision coverage. If your area sees many cases of theft, vandalism or natural disasters, you might want a lower deductible for comprehensive coverage.
Can I adjust my car insurance deductible?
Yes, you can. When you apply for car insurance coverage, many insurers will give you the option to choose your deductible. You can:
- Choose the standard deductible amount quoted.
- Increase your deductible – doing so will lower your premium.
- Reduce your deductible – this will result in a higher premium.
Should I change my car insurance deductible?
You’re the only person who can answer that question. It’s really up to you, your budget and which option you think will provide the best value for your money.
For example, while lowering your deductible will reduce the financial strain when you file a claim, it means you’ll need to pay more to purchase coverage in the first place. On the other hand, increasing your deductible makes coverage more affordable but could put pressure on your budget if you ever need to file a claim.
If you want to save some cash, call your insurer to find out how much your premiums will drop if you raise your deductible. That might help you make the decision.
Why do I have a car insurance deductible?
The purpose of a car insurance deductible is to reduce the number of small claims insurers are required to pay out. If deductibles didn’t exist, we’d all be able to file claims for every minor little bump, scratch and dent our cars suffer.
While this may seem like a wonderful idea on the surface, in reality, it would cause the cost of car insurance premiums to skyrocket — which could leave a much bigger dent in your bank balance.
But by getting policyholders to agree to pay the first part of each claim themselves, insurers are able to prevent claims for minor repairs and keep car insurance premiums down. This, in turn, means that you can fall back on car insurance in those situations where you really need the financial protection it provides.
How to pay my deductible after a claim
When settling your claim, some car insurance companies subtract the deductible from your payout, leaving you to pay that amount for car repairs. However, you may pay your deductible to the car insurance company if your company pays the repair shop directly. You may follow this process:
- You send your car to the mechanic for a repair estimate.
- Your car insurance company negotiates and approves the estimate, paying the total repair bill.
- You give your payment details to your adjuster to reimburse the deductible amount.
- In other cases, your insurance company will pay the repair shop only the approved amount. You’ll pay the mechanic the amount not covered by your insurance.
When do I not have to pay a deductible?
The circumstances when you don’t have to pay a car insurance deductible generally depend on the insurer and your individual policy. Here are a couple situations where you may be able to avoid paying your deductible:
You’re not at fault in the car accident.
If another driver is found responsible for your accident damage or injuries, you won’t pay a deductible when filing the claim through that driver’s car insurance.
However, you might pay a deductible up front if you file the claim through your own car insurance and let your insurer recover costs from the at-fault driver’s policy. This process is called subrogation, and you’ll get your deductible back once your insurer receives its reimbursement.
You file a roadside assistance or uninsured motorist claim.
Uninsured motorist claims for injuries won’t come with a deductible. You may or may not pay a deductible when filing an uninsured motorist property damage claim, depending on your state’s laws.
In addition, roadside assistance doesn’t come with a deductible, although you typically are limited in how much the service costs. Your service cost limits may vary from $75 to $200 per call, and this limit should be specified on your policy. Requesting roadside service also doesn’t count against you as a car insurance claim.
You bought a deductible waiver.
Your insurance company may agree to waive your deductible if you pay an additional premium. However, the extra premium may offset the benefit of not paying your deductible. You’ll see deductible waiver options for glass or windshield repairs or rental car insurance.
You wait to repair damage.
If your car is drivable, you can choose to wait until you’ve saved up to get your car repaired. You’ll need to file the claim right away, but you don’t have to repair the damage immediately. Your insurance company will issue a check for the damage minus your deductible. You can take your car to get fixed once you have the money for the deductible to pay the repair shop.
What if I disagree with my insurer on paying the deductible?
If you think your insurance company is unfairly asking you to pay a deductible, you could dispute your car insurance claim. This may happen if your insurer classifies the accident as a collision claim, rather than a comprehensive or uninsured motorist claim.
You can dispute the claim through your car insurance company’s internal investigations department, or you can file a complaint with your state’s insurance department. However, refusing to settle your claim could lead to the insurer not paying to repair your car, and you may need a lawyer to help you recover damage expenses in some cases.
Bottom line
Your deductible is an important factor when considering your total premium cost. Whether you decide to increase your deductible, lower it or keep it at the same level, make sure that you’ll be able to afford to pay premiums whenever they’re due, and that the amount payable when you need to claim won’t put you under significant financial strain. If you’re not happy with your current deductible and premium, compare other car insurance providers to find the best balance for you.
Compare car insurance after an accident
Picture: Shutterstock
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