Yes, a $500 deductible is good for car insurance since it is one of the most common deductible amounts. A $500 deductible is often chosen because it is high enough to keep monthly premiums down while still being a relatively affordable amount to pay out of pocket in the event of a claim.
When choosing a deductible, higher deductibles may seem like a good idea because they typically result in lower monthly premiums. But be careful to only choose a deductible that you could afford to pay out of pocket if an accident occurs.
You should also consider the total amount of your deductibles when choosing a deductible for each type of coverage. For example, if you are at fault for an accident, you may have to pay your collision deductible as well as deductibles for personal injury protection or health insurance.
You have to pay a car insurance deductible when you file a claim with your own car insurance company after most types of incidents. For example, if you cause an accident that damages your vehicle, you will need to file a claim with your own collision insurance and pay your collision deductible.… read full answer
You use your collision insurance as supplemental coverage if you are not at fault.
You and another driver share the fault for an accident.
In some situations, you may need to use your own collision insurance to repair your vehicle while the insurance adjusters determine who is at fault. Although you may need to pay your deductible initially in that case, your insurance company will recover your deductible from the at-fault driver through subrogation if you are found to be not at fault.
You Will Not Have to Pay a Deductible If:
You are not at fault for an accident. The at-fault driver’s liability insurance will cover your property damage and medical expenses.
Another driver files a claim with your insurance. You do not have to pay a deductible for your liability insurance to cover them.
You use MedPay to cover your own medical expenses, regardless of fault.
A deductible affects car insurance by determining the amount that a driver needs to pay before their insurance company will cover the cost of a claim. Deductibles also affect car insurance premiums, with higher deductibles generally resulting in lower premiums and vice versa. For example, choosing a $500 deductible instead of a $250 deductible could save a policyholder around 29% on their collision premium.… read full answer
Deductibles most commonly apply to collision and comprehensive insurance, which cover the policyholder’s own vehicle in different situations. Drivers can choose their deductible amount when purchasing a car insurance policy, and options typically range from $100 to $2,000. Even though a higher deductible can save you money in the short term, it’s important to choose an amount you can afford.
A $1,000 deductible is better than a $500 deductible if you can afford the increased out-of-pocket cost in the event of an accident, because a higher deductible means you’ll pay lower premiums. Choosing an insurance deductible depends on the size of your emergency fund and how much you can afford for monthly premiums.… read full answer
How to Choose Between a $500 and a $1,000 Deductible
1. Figure out how much you would save on your premium with a $1,000 deductible.
The goal is to determine if those savings are worth paying an extra $500 out of pocket after an accident. Car insurance companies typically use a $500 deductible to give quotes, which means you’ll need to make a point of checking how things change with a $1,000 deductible.
Remember that the premium savings will not always be proportional to the extra out-of-pocket costs after an accident. For example, Progressive reports that doubling your deductible from $500 to $1,000 may result in only a 28% decrease in premiums on average.
2. Consider how much you could afford to pay if an accident happened today.
Accidents can happen at any moment, so if you don’t have a lot of savings or expendable income, a lower deductible is usually a safer choice to avoid financial stress after an accident.
3. Determine your car’s actual cash value.
If you have an old car that’s only worth $2,500, for example, you don’t want to carry a deductible of $1,000. It’s too close to the total value of your vehicle, which means the replacement cost wouldn’t put much more stress on your finances than the deductible itself.
4. Make a decision based on your financial situation and preferences.
After evaluating your income, monthly expenses, savings, available credit and car value, it should be clear which is a better deal for you: saving monthly on premiums or saving in the event of an accident.
Although $500 and $1,000 are the most common deductibles, you may want to consider other deductible amounts, too. Some companies offer lower and higher options, such as $100, $250 or $2,500 deductibles.
No matter what you decide, be sure to set aside enough cash to cover your deductible before you need to make a claim. To learn more, check out WalletHub’s guide to car insurance deductibles.
WalletHub Answers is a free service that helps consumers access financial information. Information on WalletHub Answers is provided “as is” and should not be considered financial, legal or investment advice. WalletHub is not a financial advisor, law firm, “lawyer referral service,” or a substitute for a financial advisor, attorney, or law firm. You may want to hire a professional before making any decision. WalletHub does not endorse any particular contributors and cannot guarantee the quality or reliability of any information posted. The helpfulness of a financial advisor's answer is not indicative of future advisor performance.
WalletHub members have a wealth of knowledge to share, and we encourage everyone to do so while respecting our content guidelines. This question was posted by WalletHub. Please keep in mind that editorial and user-generated content on this page is not reviewed or otherwise endorsed by any financial institution. In addition, it is not a financial institution’s responsibility to ensure all posts and questions are answered.
Ad Disclosure: Certain offers that appear on this site originate from paying advertisers, and this will be noted on an offer’s details page using the designation "Sponsored", where applicable. Advertising may impact how and where products appear on this site (including, for example, the order in which they appear). At WalletHub we try to present a wide array of offers, but our offers do not represent all financial services companies or products.