What does it mean when you have a $1,000 deductible?

A $1,000 deductible means you will have to pay $1,000 out of pocket before your insurance company will pay for the rest. In most cases, your insurance company will pay the claim amount, minus the $1,000 deductible, directly to you or a third-party that is owed for services.

$1,000 Deductible in Car Insurance

In car insurance, having a $1,000 deductible means that you’ll need to pay $1,000 of your claim yourself, whether it is a collision insurance claim or a comprehensive insurance claim. Your car insurance company will pay the mechanic or auto body shop directly for the amount needed, minus your deductible.

If the damage to your vehicle is less than $1,000, you’ll have to pay for it entirely out of pocket. Your insurance company will not pay for any claims that cost less than your deductible.

A $1,000 deductible also means lower premiums, in most instances. The higher a deductible is, the cheaper the premiums become. The most common deductible amount is $500, but many insurers offer deductibles ranging from $100 to over $2,000.

$1,000 Deductible in Other Types of Insurance

Health insurance and homeowners insurance use deductibles in exactly the same way as car insurance. You pay the deductible, and your insurance company covers the rest. While $1,000 is a common deductible for homeowners insurance, deductibles for health insurance tend to be a bit more expensive.   

To learn more, check out WalletHub’s guide to car insurance deductibles.