What Is a Car Insurance Deductible?
A car insurance deductible is the amount of money you’ll pay out of pocket for an accident before your insurance company pays the rest. For example, if you file a claim for $1,500 and you have a $500 deductible, you will have to pay the $500 deductible before your insurer will cover the remaining $1,000 balance.
Key Things to Know About Car Insurance Deductibles
- The average car insurance deductible is $500.
- Not every type of car insurance uses a deductible.
- The higher your car insurance deductible is, the lower your car insurance premium will be.
- If you’re at-fault in a collision, you can’t avoid paying your deductible.
- Most drivers pay a deductible when they’re not at fault, but there are some exceptions.
How Car Insurance Deductibles Work
Car insurance deductibles work as a prerequisite for filing certain types of claims, ensuring that policyholders don’t file frivolous claims by having them pay a portion of the cost up front. Deductible amounts are chosen and agreed upon by the policyholder when purchasing an insurance policy.
Most car insurance companies simply subtract the cost of the deductible from your claim payout. For example, if your mechanic bills $3,000 in repairs and you have a $500 deductible, your insurer will write a check for $2,500 to cover it.
Deductibles work the same for every type of car insurance coverage that uses deductibles. Additionally, car insurance deductibles work very similarly to deductibles for health insurance, homeowners insurance, and business insurance.
Learn more about how car insurance deductibles work.
Which types of car insurance have a deductible?
Liability Insurance: No Deductible
Liability insurance never uses a deductible. This type of insurance helps cover damages you cause to another person or their property in an accident.
Collision Insurance: Deductible
Collision insurance almost always has a deductible, ranging from $100 to $1,000. This type of insurance covers your car from accidents, no matter who is at fault.
Comprehensive Insurance: Deductible
Comprehensive insurance usually has a deductible of $100 to $1,000, except in certain glass repair claims. This type of insurance covers damage from events outside of your control, like fires, floods, falling objects, and vandalism.
Personal Injury Protection: Deductible
Personal injury protection (PIP) often has a deductible that can be as low as $100 and up to $2,500. However, Utah does not allow deductibles for personal injury protection.
This type of coverage helps to cover medical expenses for you and your passengers. It is required in 13 states.
Uninsured Motorist Bodily Injury Coverage: No Deductible
Uninsured motorist bodily injury (UMBI) coverage generally does not require a deductible. This type of insurance helps pay for your medical expenses after an accident with an uninsured driver or a driver who does not have high enough coverage limits.
Uninsured Motorist Property Damage Coverage: Deductible
Uninsured motorist property damage (UMPD) coverage often has a deductible ranging from $100 to $2,000. This type of insurance covers your property damage costs after an accident with an uninsured driver or a driver who does not have high enough coverage limits.
Medical Payments Coverage: No Deductible
Medical payments coverage (MedPay) never charges a deductible. This type of coverage helps cover your medical expenses after an accident.
Mechanical Breakdown Insurance: Deductible
How Deductibles Affect Car Insurance Premiums
|Deductible||Monthly Premium||Cost Difference|
|$250||$182||27% lower than $100 deductible|
|$500||$129||29% lower than $250 deductible|
|$1,000||$89||31% lower than $500 deductible|
|$2,000||$84||6% lower than $1,000 deductible|
Note: Rates are for a six-month collision coverage policy, per Progessive.com.
While increasing your deductible may result in a lower premium, make sure you’re considering overall value. Jumping from a $1,000 deductible to a $2,000 deductible may save you only 6% or so, for example. If that 6% in savings is only equal to about $5 each month, is it worth paying an extra $1,000 out of pocket after an accident? Probably not.
However, if you are a safe driver with very few past claims who manages and saves money well, a high deductible policy can make sense. Learn more about how deductibles affect car insurance.
How to Choose a Car Insurance Deductible
To choose a car insurance deductible, you’ll need to determine how much you are willing to pay out of pocket in the event of an accident and how likely you are to have to file a claim. You’ll also want to figure out how much a higher deductible may save you in premiums and compare that to how much you’d save in an accident with a lower deductible. The most common deductible amount is $500, but companies usually offer deductibles ranging from $100 to over $2,000.
Learn more about how to choose a car insurance deductible.
Factors to Consider When Choosing a Deductible
- Likelihood of filing a claim
- Your savings
- How much you’re willing to spend out of pocket
- Your car’s value
- How much a higher deductible will lower your premiums
- How much a lower deductible will cost per month
- Deductible amounts for different types of coverage that you may need to use in an accident, such as PIP, collision, and comprehensive – and whether the total amount is affordable
- Whether or not your loan or lease requires a specific deductible
When Do You Have to Pay Car Insurance Deductibles?
You have to pay your car insurance deductible if you cause an accident that damages your vehicle and you file a claim using your collision insurance. If you’re at-fault for an accident and are injured, you will have to pay a PIP deductible, too. Most situations where you use your own insurance, you’ll need to pay a deductible, sometimes even when you’re not at-fault.
Examples of When You Have to Pay Car Insurance Deductibles
- When you use PIP insurance to pay for your own medical expenses regardless of who was at fault.
- When you file a claim with your collision insurance after accidents you cause.
- When you use your own comprehensive insurance to cover vehicle damage.
- When using uninsured motorist property damage insurance to cover vehicle damage after an accident with an uninsured or underinsured driver.
- When fault is shared in an accident and you use your own insurance to pay for your vehicle damage and medical expenses.
When You Are Not Required to Pay Your Car Insurance Deductible
In most cases, you do not have to pay your deductible if another insured driver hits you. The other driver’s liability insurance should pay for your repairs.
You may be able to choose to go through your own collision insurance to repair your car while fault is being determined. In this case, you will have to pay your deductible at first, but your insurance company will seek full reimbursement from the at-fault driver’s insurer through a subrogation claim.
Additionally, if you are at fault for an accident, you will not have to pay a deductible to have your liability insurance cover the cost of the victim’s repairs and medical expenses.
Learn more about when you pay deductibles for car insurance.
How to Avoid Paying Car Insurance Deductibles
You can avoid paying your car insurance deductible by asking your mechanic to waive the deductible in return for your business. Additionally, your insurance company may waive your deductible for comprehensive insurance if it is for a glass repair claim.
However, if you’re at-fault for an accident, there’s not much you can do to get out of your collision insurance deductible if you want your own vehicle repairs covered. You could try to set up a payment plan for the balance with your mechanic, but mechanics can legally keep your car until the debt is repaid.
Learn more about how to avoid paying car insurance deductibles.