When you get into a car accident and your car needs repairs, you’ll have to pay a certain amount of money before the insurance company will pay for damages. This amount of money is called a car insurance deductible. In this guide, we’ll explain what a deductible is, how it works, and how to choose one.
Our research team has reviewed the best car insurance companies around to help you find the right provider for your needs. Before choosing a policy, compare car insurance quotes from several providers.
What Is A Car Insurance Deductible?
A car insurance deductible is the amount of money you pay out of pocket before your insurance company will cover damages or medical expenses after an accident. You don’t pay the deductible to your insurance company, but rather to the repair shop that’s fixing your car or the medical office that’s providing treatment.
As an example, let’s say you have a $500 deductible. If you file an insurance claim that results in a $5,000 repair job, you’ll need to pay $500 toward any repairs or other damage before the insurance company will pay the remaining $4,500. If your claim is less than your deductible, you’ll be responsible for the full amount.
Health Insurance Deductibles Vs. Car Insurance Deductibles
Health insurance deductibles reset each plan year. The money you spend out of pocket for health services adds up, which chips away at your deductible. Once you’ve met your deductible amount, the health insurance company takes over payments. The deductible amount resets at the new plan year.
With car insurance, you pay your deductible amount each time you file a claim. There’s no limit to how many times you pay your deductible per year, and out-of-pocket expenses don’t accumulate over time. You’ll also have different deductibles for different types of coverage. If you file a claim on your collision coverage, you’ll have to pay a different deductible than if you file a comprehensive coverage claim.
How Does A Car Insurance Deductible Work?
When purchasing an auto insurance policy, you’ll be able to choose your deductible amount. The amount of your deductible will change the amount of your insurance premium. If you choose a higher deductible, you’ll pay a lower premium. The opposite is also true: a lower deductible means a higher premium.
What Is An Average Car Insurance Deductible Amount?
Typically, auto insurance deductibles range from $500 to $2,000. The most common deductible amounts are:
Many insurers set the default deductible at $500, though some people opt for lower or higher deductibles based on the coverage.
If you live in an area with high rates of vandalism or property theft, you may want a lower comprehensive deductible. This would help you pay less out of pocket if you filed a claim. To keep your total car insurance premium affordable, you may then opt for a higher collision deductible and pay less per month.
What Is A Vanishing Deductible?
A vanishing deductible, sometimes called a “disappearing deductible” or a “diminishing deductible,” is a program offered by a few insurance companies to reward safe drivers. The longer a driver goes without filing a claim, the lower the deductible on their insurance policy gets.
If you have a vanishing deductible, you earn credit toward your deductible–usually $50 to $100–each year you go without claims, policy lapses, or certain violations. The four largest companies currently offering vanishing deductibles are:
What Types Of Car Insurance Have Deductibles?
No matter what state you live in, collision and comprehensive coverage will have deductibles. Liability insurance doesn’t have a deductible. Deductibles for the other main types of coverage vary from state to state.
The table below lists common types of car insurance, basic details of each coverage, and whether or not it has a deductible.
|Type of Coverage||Coverage Details||Deductible|
|Bodily injury liability (BI)||Covers the other partyâ€™s medical bills from an accident where youâ€™re at fault||No|
|Property damage liability (PD)||Covers the other partyâ€™s car or other property repair costs from an accident where youâ€™re at fault||No|
|Collision||Covers damage to your car from an accident, regardless of whoâ€™s at fault||Yes|
|Comprehensive||Covers damages to your car from causes not related to a car accident, like natural disasters or theft||Yes|
|Uninsured motorist property damage (UMPD)||Covers damages to you or your car if youâ€™re hit by a driver who doesnâ€™t have car insurance||Depends on the state|
|Underinsured motorist property damage (UIMPD)||Covers damages to you or your car if youâ€™re hit by a driver who doesnâ€™t have enough car insurance||Depends on the state|
|Medical payments (MedPay)||Covers your medical expenses after an accident||No|
|Personal injury protection (PIP)||Covers your medical expenses, lost wages, and funeral costs after an accident||Depends on the state|
When shopping for car insurance, check out your state’s insurance guidelines to see what deductibles you may have to pay. Certain types of coverage–like PIP–aren’t available in every state but are required in no-fault states. For example, Utah requires PIP but doesn’t permit deductibles for PIP policies.
When Do I Pay A Car Insurance Deductible?
Here are the most common scenarios in which you’d be required to pay a deductible:
- You’re the at-fault driver for a collision: You’ll have to pay your collision deductible on the insurance claim.
- You file a comprehensive claim: You’ll pay a deductible if your car is damaged by a fire, flood, or other natural disaster. Though comprehensive covers windshield replacement, some insurance companies may waive your deductible if the glass can be repaired rather than replaced.
- You file a PIP claim: All no-fault states require PIP. Some no-fault states require you to pay a deductible, but Utah doesn’t permit deductibles on PIP policies.
- You file an uninsured motorist claim: There are two types of uninsured motorist coverage: bodily injury (UMBI) and property damage (UMPD). Most UMBI policies don’t have a deductible, but UMPD can require one. In that case, you may have to pay a deductible on an UMPD claim before the insurer will cover any damages.
If you’re not found at fault for a car accident but the other party’s insurance claim takes too long to process, you can file a claim with your own insurance company. You may have to pay a deductible to get your car repaired, but you can then take the other party to court to recover your deductible.
When Do I Not Pay A Deductible?
The most likely situations in which you wouldn’t pay a deductible are:
- Another driver is found to be at fault: If another insured driver hits you and damages your vehicle, you won’t have to pay a deductible before an insurance claim covers your car repairs. Deductibles only apply when you file a claim with your own insurance company.
- You have a vanishing deductible: If you’ve earned enough credits to cover your vanishing deductible, you won’t have to pay. Once you use your vanishing deductible, there is usually a waiting period before the program restarts.
How Do I Choose A Car Insurance Deductible?
When choosing a deductible for your car insurance policy, it’s important to understand your financial situation. If you want to reduce your insurance premium and you have the income to cover your deductible after a claim, it may be wise to choose a higher deductible.
If you don’t have the financial ability to pay a high deductible, choosing a low deductible will keep your out-of-pocket costs at a minimum. However, this will also lead to a higher premium.
Recommendations For Car Insurance
Our team has researched the top insurance providers in the country. Before settling on an insurer, compare car insurance policies to find what best suits your budget and needs. We recommend starting your search with Geico and Progessive.
Geico: Best For Discounts
We found that Geico offers some of the most affordable car insurance rates on the market. It’s the second-largest insurer in the U.S., and that’s likely thanks to its high policy limits and wide variety of discount opportunities.
Geico holds an A++ financial strength rating from AM Best and an A+ rating from the Better Business Bureau. The insurer offers the six standard types of car insurance coverage as well as optional add-ons such as rental car reimbursement and rideshare insurance.
Read more: Geico review
Progressive: Best Usage-Based Insurance
Progressive is the third-largest insurance provider in the country. The company has an easy auto insurance quote process and a highly rated mobile app, helping it earn an excellent reputation in the insurance industry.
Progressive also has SnapshotⓇ, a usage-based insurance program that monitors your driving habits and rewards safe drivers. The company provides a full slate of standard coverage options, add-ons, and additional insurance products.
Read more: Progressive review
Car Insurance Deductible: FAQ
How We Rate Insurers
Our review process aims to deliver consistent and unbiased assessments of car insurance providers. While there are multiple qualities that make a car insurance company successful, our review team focuses on those we believe are the most important for consumers:
- Cost: Cost can be difficult to compare between insurers because so many factors impact annual premiums. The cheapest insurer for one driver may not be the cheapest for another. To determine our cost score, we look at insurance rate estimates generated by Quadrant Information Services, discount opportunities, and consumer reports.
- Coverage: To determine our coverage score, we look at the number of coverage options available as well as coverage limits and deductible options. Our ratings also take into account additional services and benefits like roadside assistance.
- Reliability: It’s important that an auto insurer is able to meet its claims obligations. Companies with a strong financial strength rating from AM Best score best in this category. Established insurers with a long history of reliable service also receive positive marks.
- Service: We comb through customer reviews on sites like the Better Business Bureau (BBB) to learn about customer experiences. Insurers with a low volume of complaints score well in this area. We also consider the claims process, giving higher ratings to car insurance providers that offer easy-to-use claims apps.
*Data accurate at time of publication.