How Do I Choose the Right Car Insurance Deductible?

Choosing the right car insurance deductible is an important decision that can impact the cost of your auto policy and how much you pay in the event of a covered car accident. Factors to consider when choosing a deductible include your financial situation, driving habits, car value, and driving history.

Keep reading to learn whether you should choose a high or low deductible and which types of claims require you pay it.

On This Page

• 

  What Is a Car Insurance Deductible?

• 

  How Do Car Insurance Deductibles Work?

• 

  How Much Does the Average Car Insurance Deductible Cost?

• 

  How To Choose the Right Car Insurance Deductible

• 

  Types of Car Insurance Deductibles

• 

  When Do You Have to Pay Car Insurance Deductibles?

• 

  When Is It Not Required to Pay a Deductible in Car Insurance?

• 

  FAQs

What Is a Car Insurance Deductible?

A car insurance deductible is the amount of money you agree to pay out of pocket before your insurance company starts paying. For example, if you have a $250 deductible and get into an accident that causes $5,000 in damages, you will need to pay the first $250 out-of-pocket and your insurance provider will cover the remaining $4,750.

How Do Car Insurance Deductibles Work?

Insurance is a risk-sharing contract between the provider and the insured — paying a deductible (and a premium) is how the driver shoulders their portion of the financial burden. In exchange, the insurance company agrees to cover the rest of the bill, up to your policy’s limits.

Typically, the higher your deductible, the lower your monthly car insurance premium will be, as you are taking on more financial responsibility. You choose your deductible amount when you purchase your auto insurance policy.

The types of claims that require paying a deductible usually involve repair bills to your car but can sometimes include medical expenses.

Keep in mind that you will need to pay a deductible for each claim you file. So if you get into an accident and then a second accident just one week later and you file a collision claim for each incident, you may need to pay two separate deductibles. However, if the losses for each accident fall below the deductible, your insurance company will not issue a payout and you will be on the hook for 100% of the financial risk.

How Much Does the Average Car Insurance Deductible Cost?

The average car insurance deductible is $500, though the amount will vary depending on your plan, premium and insurance company.^[1] Deductibles can range from $100 to $2,500.^[2]

When considering the cost of a deductible, weigh the potential savings in your monthly premium against the financial risk of having to pay a higher amount out-of-pocket in the event of an accident.

Consider additional factors such as your driving record and the likelihood of needing to file a claim when choosing a deductible amount. If you do need to make a claim and pay your car insurance deductible, that amount will count toward your coverage limit.

How To Choose the Right Car Insurance Deductible

Choosing the right car insurance deductible will involve striking the right balance between your monthly premium and how much you can afford to pay out of pocket when an unexpected accident happens. Here are some factors to consider:

• Your budget: Consider what (liquid) financial reserves you can access after a car accident, such as emergency savings.
• Your driving habits: Drivers who frequently file claims may want a low deductible so their insurance kicks in earlier because they meet their out-of-pocket cost faster. Conversely, safe drivers with clean or mostly clean driving records may want to choose a high deductible to enjoy lower premiums.
• Your car's value: Vehicles that aren't worth much aren't worth shelling out a lot of money to cover. As such, having a lower premium will be more cost-effective than having to pay through the nose to fix up a beater.

Below are some scenarios that describe when a low or high deductible would be preferable.

Types of Car Insurance Deductibles

You are typically required to pay a car insurance deductible when you file a claim for covered damages to your vehicle and sometimes your injuries. Therefore, you may pay a different deductible for each of the following coverage types:

• Comprehensive
• Collision
• Uninsured/underinsured motorist property damage
• Personal injury protection (also called no-fault insurance)

When Do You Have to Pay Car Insurance Deductibles?

Not all types of auto coverage will require you to pay a deductible. Those that do usually involve first-party benefits that pay for damages to your car or if you suffer injuries in a no-fault state.

1. Collision*: Pays to repair or replace your vehicle if it was damaged or totaled in an accident regardless of who was at fault. Not legally mandated but usually required if you are leasing or financing your car.
2. Comprehensive: Covers your vehicle if it was damaged by non-collision-type peril, like fire, hail, vandalism or theft.
3. Personal injury protection (PIP): Provides financial support towards injuries you or your passengers sustain due to a covered accident, including childcare, grocery delivery fees, lost income or medical expenses.
4. Uninsured/underinsured motorist (UM/UIM) property damage: Pays for your repair bills if the other driver was at fault but does not have insurance or not enough coverage. Deductibles typically do not apply for UM/UIM bodily injury claims.

*Drivers can pay a few extra dollars per month on a collision deductible waiver (CDW). Your insurance provider will pay your deductible if you’re in a qualifying automobile accident, such as the offending driver doesn’t have insurance. CDWs are not offered by all insurance providers and availability can vary by state.

When Is It Not Required to Pay a Deductible in Car Insurance?

You generally won't need to pay a deductible under the following circumstances:

• Liability claims: You will not be required to pay a deductible if you’re the at-fault driver and your insurance company is paying for the other driver’s repair or medical bills.
• The other driver was at fault: You can file a liability claim with the other driver’s insurance company to cover your losses from a car accident.
• Glass repairs: Some insurers waive deductibles on glass-only claims for drivers in certain states.^[3]
• Hit-and-run accidents when the other driver was found: If you find the other driver, you can get reimbursed for your losses by filing a liability claim with their insurer. Otherwise, you will need to pay your policy's deductible if you file a collision claim or uninsured/underinsured motorist claim with your insurer.

Reviewing your car insurance policy to understand the specific terms and conditions related to car insurance deductibles and claims is essential. Additionally, different insurance companies and policies may have different requirements and exceptions, so it's important to check with your insurance provider if you have any questions or concerns.