Auto Insurance Deductibles Defined (2024)
Auto insurance deductibles defined is what you pay before coverage applies. The average deductible for car insurance is $500, meaning you get a $4,000 payout if damages are $4,500. Consider a high auto insurance deductible for low rates if possible. You can learn more about car insurance deductibles below.
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Daniel Walker
Licensed Auto Insurance Agent
Daniel Walker graduated with a BS in Administrative Management in 2005 and has run his family’s insurance agency, FCI Agency, for over 15 years (BBB A+). He is licensed as an insurance agent to write property and casualty insurance, including home, life, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com and Safeco. To ensure our content is accura...
Licensed Auto Insurance Agent
UPDATED: Oct 18, 2023
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Advertiser Disclosure: We strive to help you make confident auto insurance decisions. Comparison shopping should be easy. We are not affiliated with any one auto insurance provider and cannot guarantee quotes from any single provider. Our partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.
Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.
UPDATED: Oct 18, 2023
It’s all about you. We want to help you make the right coverage choices.
Advertiser Disclosure: We strive to help you make confident auto insurance decisions. Comparison shopping should be easy. We are not affiliated with any one auto insurance provider and cannot guarantee quotes from any single provider. Our partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.
On This Page
- Your auto insurance deductible is the amount you must contribute to repair costs before your insurance pays
- While most companies offer several options, the average deductible for car insurance is $500
- Most types of auto insurance have deductibles, but some don’t
Auto insurance deductibles are defined as the amout you must pay before your coverage pays out a claim. Your deductible affects your rates, so consider a higher deductible to get cheap auto insurance premiums if you can afford the out-of-pocket expense.
Drivers typically get to select how much their auto insurance deductible will be, but the most commonly chosen amount is $500. It might seem like a simple choice, but picking the right deductible for your car insurance is crucial, so learn more about how to get auto insurance coverage.
Read on to learn how to select the best deductible for your car insurance. Then, enter your ZIP code above to find a deductible for car insurance in your area offering the best rates and coverage for you.
Auto Insurance Deductible Definition
Your car insurance deductible is an amount you agree to pay before your insurance kicks in. Think of it as risk-sharing — you and your insurance company have a financial stake in your car repairs.
Paying a deductible before your insurance takes over prevents drivers from making claims for minor events.
When you need to make a claim, your insurance company will verify that your policy covers the damage to your car. After your claim is approved, your car insurance company will send you a check or pay your mechanic directly, minus whatever your deductible is. Learn more about how to file an auto insurance claim and pay your car insurance deductible.
You might be able to adjust your deductible during your policy, but you can always change it when your insurance renews.
The amount you select directly affects your car insurance rates. You might find it necessary to change your deductible when you need to save money.
Choosing a deductible is a simple task, but it can have long-term effects on your insurance experience. If you’re unsure how much your deductible should be, an insurance representative can help you choose the right amount.
How Deductibles in Auto Insurance Work
Choosing a deductible is one thing, but knowing how a car insurance deductible works is a little more complicated.
So, when do you have to pay a deductible? Most insurance companies don’t require you to physically pay your deductible. Instead, they subtract your deductible from the cost of your repairs.
For example, if a tree branch falls on your car and causes $2,000 damage, your company will subtract your comprehensive auto insurance deductible from the repair cost.
That means if you have a $1,000 deductible, your insurance company will pay for $1,000 worth of repairs. The remainder of the repair will be your responsibility.
Your deductible works the same, no matter what type of claim you need to make. Whether it’s liability, personal injury protection, custom parts and equipment, or any other type of coverage, deductibles will always work the same.
Average Deductible Amount for Car Insurance
You generally have options from your insurer for the amount your deductible will cost. Options vary by company and insurance type but usually fit most budgets.
Most insurance companies offer deductibles in amounts of $250, $500, $1,000, and $2,000.
Since deductibles are the part drivers must cover, the average deductible most people choose for car insurance is $500. A $500 deductible is an affordable amount to pay for car repairs and usually keeps your insurance rates relatively low.
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How Your Auto Insurance Deductible Affects Rates
How your deductible affects your car insurance rates is simple — the lower your deductible, the higher your rates.
You should carefully consider the value of choosing a high deductible. High deductible car insurance offers the cheapest rates, but you might not save that much compared to a slightly lower deductible. While you can justifiably select a higher deductible if you have a history of being a safe driver, it might not be worth the risk.
How to Choose Your Auto Insurance Deductible
The most important factor to consider when selecting a deductible is how much you can pay after an accident.
According to ConsumerReports, raising your deductibles from $500 to $1,000 can cut 11% off your premium on average. While a high deductible will save you money on your monthly bill, not everyone is able to pay $2,000 after an accident.
However, your monthly rates also need to be considered. After all, what’s the point of having insurance if it’s too expensive?
There are many factors to consider when choosing a deductible, but here are a few to keep in mind:
- How much you can spend out of pocket on an emergency car repair
- The value of your car
- How much you can save by increasing your deductible
- Whether your loan or lease specifies how much your deductible should be
Another consideration is how much your deductible should be for different types of car insurance. For example, a deductible for collision insurance might be best kept low since accidents are fairly common and repairs can be expensive.
On the other hand, you might be safer choosing a higher deductible for coverages like personal injury protection (PIP) auto insurance or medical payments.
Auto Insurance Deductible: Situations Where You Will and Won’t Need to Pay it
Whether you pay a deductible after an incident depends on the type of insurance you need to make a claim with.
Here are some examples on when you will and won’t have to pay a deductible:
- You won’t pay a deductible if you cause an accident but don’t damage your vehicle. The other driver will be making a claim on your liability insurance. However, your insurance rates will increase.
- If your car is damaged in an accident you cause, and you want to file a collision claim, you’ll have to pay the deductible.
- If another driver strikes you, you won’t have to pay a deductible to file a claim against the other driver’s liability insurance.
Things get a little more complicated if you’re the victim of a hit-and-run accident. Uninsured motorist (UM) coverage will help pay for damage to your car if you have it, sometimes without the need for paying a deductible.
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However, if you don’t have uninsured motorist insurance, you’ll have to rely on your collision auto insurance, which requires a deductible.
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Find the Auto Insurance Policy With the Right Deductible Today
Your deductible amount is one of the most significant factors that affect auto insurance rates. However, while it can be tempting to choose the highest option to keep your rates down, ensure you can afford the car insurance deductible if you need to file a claim.
When you need to save money, comparing quotes the best auto insurance companies might find you lower rates than raising your deductible. An insurance representative can help you determine how much you should choose for your deductible when you look at new companies.
Frequently Asked Questions
What is the definition of a car insurance deductible?
The insurance deductible definition is the predetermined amount an auto insurance policyholder must pay to their company out of pocket before receiving a payout.
Is a $1,000 deductible good for car insurance?
A $1,000 auto insurance deductible is good if you can afford the out-of-pocket expense after an accident. You should never raise your deductible beyond an amount you can’t pay.
Is it better to have a $500 deductible or $1,000?
It’s better to have a $1,000 deductible if you can afford the higher out-of-pocket expenses if you get in an accident. So, for example, if you enough in an emergency fund to cover a $1,000 deductible, you should consider it.
How does a car insurance deductible work?
After your insurer approves your claim, you’ll receive a payout minus your deductible for car insurance.
Is there a way to not pay a deductible?
If you’re wondering how to avoid paying a car insurance deductible, some companies, such as Progressive auto insurance, offer a deductible waiver that waives your deductible for car insurance after a claim.
What is the difference between a deductible and a premium?
The amount you pay for your insurance is your premium. Premiums are usually paid in monthly installments, but you can also pay for your policy in full. Your deductible is the amount you cover after a claim, usually between $500 and $2,000. After your deductible is met, your insurance will cover the rest.
Do all car insurance policies have a deductible?
Most types of coverage have a deductible, but liability insurance does not. Optional coverages like roadside assistance or rental car reimbursement usually skip deductibles as well.
What happens if your deductible is more than the cost to repair your car?
Your insurance won’t pay for car repairs until your deductible is met. If your deductible is $1,000 and repairs will only cost $750, your insurance won’t pay for anything. In this case, there’s no need for you to make a claim.
When do you pay the deductible for car insurance?
When filing a claim, you must pay your auto insurance deductible before your company pays out. So, your insurer will remove your deductible amount from your payout.
For example, if you get in an accident with $5,000 worth of expenses and have a $2,000 deductible for car insurance, your insurer will send a check for $3,000.
Are auto insurance deductibles applicable to all types of claims?
Auto insurance deductibles generally apply to physical damage claims, such as accidents, theft, vandalism, or weather-related damage. However, deductibles may not apply to certain coverages, such as liability insurance, which covers damages you cause to others. It’s essential to review your policy documents or consult with your insurance provider to understand how deductibles apply to specific claims.
Do auto insurance deductibles reset after every claim?
Auto insurance deductibles typically don’t reset after every claim. Once you’ve paid your deductible for a claim, it usually remains the same until you choose to adjust it. However, it’s important to confirm this with your insurance company, as policies may vary. Multiple claims within a short period may lead to increased premiums, but the deductible itself usually does not reset.
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Enter your ZIP code below to view companies that have cheap auto insurance rates.
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Daniel Walker
Licensed Auto Insurance Agent
Daniel Walker graduated with a BS in Administrative Management in 2005 and has run his family’s insurance agency, FCI Agency, for over 15 years (BBB A+). He is licensed as an insurance agent to write property and casualty insurance, including home, life, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com and Safeco. To ensure our content is accura...
Licensed Auto Insurance Agent
Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.