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Compare car insurance deductibles
How much deductible can you afford and how does it affect insurance claims?
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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's in this guide?
What is a car insurance deductible?
The car insurance deductible is the amount you’re required to pay when you make a claim on your policy. In other words, it’s the amount you agree to contribute toward the cost of a claim, with the insurer covering the remaining amount.
For example, if your policy has a $500 deductible and you make a claim for $3,000 worth of damage to your vehicle, you’ll cover the first $500 of the repair costs and the insurer will foot the bill for the remaining $2,500.
However, the amount of deductible varies depending on a number of factors. Not only does the deductible differ according to the policy you select, but you may be able to adjust the amount higher to get cheaper insurance. Just make sure you’re able to cover the full amount in the event of a claim.
How do I find my car insurance deductible?
The simplest way to find out the deductible that applies to your policy is to check online. Simply log in to your customer account and navigate to your existing policy. You can also call customer support if you have more questions.
Why do insurers include a deductible on policies?
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 do I pay a deductible?
How you pay your deductible depends on the insurer and the nature of your claim. When you file a claim, your insurance company will advise you whether the deductible:
- Will be deducted from any amount paid to you
- Must be paid to the insurer
- Must be paid to the mechanic when you collect your car
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How much should I pay for a car insurance deductible?
The cost of your car insurance deductible is determined when you take out coverage. Generally a standard deductible applies to your coverage amount, but you can usually choose to adjust it.
As a general guide, standard deductibles tend to range from around $250 up to $2,500, but could be higher or lower depending on your circumstances.
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.
How much is a deductible?
You can typically choose from the following deductible limits:
- $100
- $250
- $500
- $1,000
- $1,500
- $2,000
How to choose your car insurance deductible
Your insurance deductible plays a huge role in how claims are addressed if your car is damaged due to an accident or any other covered incident. Most providers allow you to choose a deductible that suits your financial situation and 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.
Here are a few factors you should consider when choosing a deductible for your policy:
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.
Value of your vehicle
You may want to adjust your deductible according to the cost of your vehicle. On a high-end or new vehicle, repairs are likely to be more expensive. In such a case, a higher deductible may make more sense.
However, if you’re driving an older vehicle that costs less to repair, it doesn’t make much sense to set a deductible that costs more than potential repairs or replacement.
Vanishing deductible
Some providers and policies offer the option of a vanishing deductible, also called a disappearing deductible. A vanishing deductible is exactly what it sounds like: After a period of time without any accidents or claims, your deductible will decrease by a given amount.
A typical claim-free period is a year, and the usual amount for that time is $100. For example, if you have a $500 vanishing deductible and go two years without an accident, your deductible will only be $300 if you file a claim after two years of accident-free driving.
But keep in mind that this feature is not free, and your deductible will reset to the original higher amount once you make a claim. To make sure you don’t end up paying more than necessary for your deductible, look at how likely it is you’ll make a claim, how much the vanishing deductible costs and if it would make more sense to just pay a slightly higher premium for a lower deductible.
Monthly premium payments
As you may know, a higher deductible may make for lower monthly premiums, providing an opportunity to save money in the long run. However, each provider’s approach to monthly premiums differs, making it difficult to tell whether increasing your deductible 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.
Level of risk
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.
Type of coverage
Some providers may give you the option to adjust your deductible depending on the type of insurance policy on your vehicle. For example, if you live in a densely populated area like a big city, it might be a good idea to carry a lower deductible on comprehensive insurance since it covers damage due to theft and vandalism. Since accidents are relatively less likely, you could offset the cost with a higher deductible on collision insurance.
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.
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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 bought a deductible waiver.
Your provider may agree to waive your deductible if you pay an additional premium. Keep in mind that the additional premium you’ll be required to pay may be fairly substantial.
You wait to repair damage.
If your car is drivable, you can choose to wait until you’ve saved up the deductible 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 provider will issue a check for the damages minus your deductible. You can take your car to get fixed once you have the money for the deductible to pay the repair shop.
Do I need to pay a car insurance deductible if I’m not at fault?
While some policies require you to pay a deductible regardless of who’s at fault, others may waive your deductible if you can meet certain conditions outlined in your policy. For example:
- If your insurer agrees that you weren’t at fault in any way. It can be difficult to prove that you didn’t contribute to the accident, so establishing your innocence may not be simple. Some states even assign blame if you could have prevented the accident by swerving or checking the intersection before proceeding.
- If you can provide the name, address and registration number of the at-fault driver. If this condition applies, problems may arise if the at-fault driver flees the scene of the accident or refuses to supply their details.
- If the insurer recovers its costs from the at-fault driver. The at-fault driver will have to be insured and agree to pay the necessary amount to your insurer.
What can you do if you think you’re being unfairly asked to pay a deductible?
You could refuse to pay the deductible and dispute it, but this means the insurer may not repair your car or may deduct the amount from any benefit you receive.
To ensure your claim is processed quickly, you can pay the deductible now and dispute the matter later.
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.
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