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How Do I Choose the Right Car Insurance Deductible?

author-photoWritten by Preston Micalizio
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Preston Micalizio

Preston Micalizio writes insurance content for SmartFinancial. He brings three years of professional experience writing ...

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editor-photoEdited by Dylan Tate
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Dylan Tate

Dylan Tate is an insurance content expert for SmartFinancial with over 300 articles about home, auto, business, health a...

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Updated March 17, 2025

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

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

Key Takeaways

  • A car insurance deductible is the amount you pay out of pocket before your auto insurance coverage starts paying.
  • Whether you choose a high deductible or a low deductible will depend on your driving habits, budget and car’s value.
  • Deductibles typically range from $100 to $2,500, with $500 being the average.
  • You won’t need to pay a deductible when you’re the at-fault driver paying for the other driver’s losses.
  • Some insurance claims, such as those with Medpay or uninsured motorist bodily injury coverage, typically don’t have deductibles.

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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 toward covered claims. For example, if you have a $250 deductible and get into an accident that causes $5,000 worth of damage, you will need to pay the first $250 out of pocket, and your insurance provider will cover the remaining $4,750.

car insurance deductible equation explained

How Do Car Insurance Deductibles Work?

Insurance is a risk-sharing contract between the provider and the insured, and 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 for covered losses. Keep in mind that your insurance will only cover up to your policy’s limits and may still require a deductible even if it doesn’t fully cover the cost of a claim.

The types of claims that require paying a deductible usually involve repairs to your car, but they can sometimes include medical expenses. Typically, the higher your deductible is, the lower your monthly car insurance premium will be, as you take on more financial responsibility. You choose your deductible amount when you purchase your auto insurance policy.

monthly premium and deductible line graph

Keep in mind that you will need to pay a deductible each time you file a claim. As a result, if you get into two car accidents within the span of a week and file a collision claim for each incident, then you may have to pay two separate deductibles. However, if the monetary 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 costs.

When Do I Pay My Car Insurance Deductible?

Car insurance deductibles are typically paid up front before you receive the claim payout from your insurance company. Generally, you will not have to submit a deductible payment to your insurer because the deductible is automatically subtracted from your insurance settlement.[1] However, you may have to pay the deductible amount to the mechanic who fixes your car so that they can be fully paid for their services.

As a result, the repairs on your vehicle may not be completed if you refuse or are unable to pay your deductible.

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 pays for the other driver’s repair or medical bills.[2]
  • Collisions where the other driver is at fault: Likewise, you won’t have to pay a deductible if you 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 where the other driver is located: If you find the other driver after a hit-and-run, you can get reimbursed for your losses by filing a liability claim with their insurer. Otherwise, you must pay your policy’s deductible when you file a collision or uninsured motorist property damage claim.[2]
  • Uninsured motorist bodily injury (UMBI) claims: This type of coverage takes effect if an uninsured driver injures you, whether in or out of your vehicle. UMBI claims typically don’t require a deductible.[2]
  • Medical payments (Medpay) claims: This type of coverage helps cover medical expenses after you’re injured in an accident, regardless of fault. It typically doesn’t have a deductible when you make a claim.[2]

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 essential to check with your insurance provider if you have any questions or concerns.

Types of Car Insurance Deductibles

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

Coverage Type What It Does

Deductible Example
Comprehensive Comprehensive insurance covers your vehicle if it is damaged by a noncollision peril, like fire, hail, vandalism or theft. It is not legally mandated, but it is usually required if you lease or finance your car.

You have a $500 deductible, and your car incurs $3,000 worth of damage due to a falling tree. Your insurance will cover $2,500, while you pay the deductible.
Collision Collision insurance pays to repair or replace your vehicle if it is damaged or totaled in an accident, regardless of who is at fault. It is not legally mandated, but it is usually required if you lease or finance your car.

You have a $500 deductible, and your car sustains $1,200 worth of damage from colliding with another car. You would need to cover the first $500, and your insurance would cover the remaining $700 worth of repairs.
Uninsured motorist property damage (UMPD) This coverage pays for your repair bills after an accident if the other driver is at fault but lacks insurance. Depending on where you live, this coverage may be mandatory, optional or unavailable.

Another driver collides with you, resulting in $2,000 worth of damage, but they don’t have insurance. Once you pay your $500 deductible, your UMPD insurance will cover the remaining $1,500.
Personal injury protection (PIP) PIP provides financial support if you or your passengers sustain injuries due to a covered accident. Covered expenses can include child care, grocery delivery, lost income and medical treatments.

After you are injured in an accident, you rack up $2,000 worth of medical bills and $500 worth of lost income from missing work. If you have a $500 deductible, you may be covered for the remaining $2,000 of the total claim after paying your deductible.

If they’re willing to pay a slightly higher premium, drivers with uninsured motorist coverage may be able to obtain a collision deductible waiver (CDW). This allows you to waive your collision insurance deductible after you are struck by an uninsured driver.[4] CDWs are not offered by all insurance providers, and availability can vary by state.

How Much Does the Average Car Insurance Deductible Cost?

The average car insurance deductible is $500, though the amount you have to pay will depend on your policy, premium and insurance company. Deductibles may potentially range from $250 to $2,500.[5]

When considering the cost of a deductible, weigh the potential savings in your monthly premium against the financial risk of paying more out of pocket in the event of an accident. You may also want to consider factors like your driving record and the likelihood that you will need to file a claim when you select your deductible.

If you 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: Selecting a higher deductible may make more sense if you have a good amount of money in savings that you can put toward your deductible, but it may be easier to pick a lower deductible and work higher premiums into your monthly budget, depending on your circumstances.
  • 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: It’s generally recommended that you opt for a low deductible if your car isn’t worth very much since the actual cash value (ACV) payout you receive in the event of a claim will already be relatively low, and a high deductible would make it even lower.[5]
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FAQs

Is it better to have a high or low deductible for car insurance?

Whether it’s better to have a high or low deductible for auto insurance depends on your financial means and willingness to take on risk. For example, a high deductible will typically result in lower monthly premiums but requires you to pay more out of pocket if you file a claim, while a low deductible will typically result in higher monthly premiums but lower out-of-pocket costs if you file a claim.

Can I negotiate my car insurance deductible?

No, you likely can’t negotiate your car insurance deductible, as insurance companies typically offer specific deductible amounts you can choose from for your policy. However, you’ll likely be able to change your deductible to another preselected amount anytime, although this will likely raise or lower your premium in exchange.

What happens if I can’t pay my car insurance deductible?

You may not be able to get your car repaired after a covered accident if you can’t pay your auto insurance deductible. Sometimes, you can negotiate a payment plan with the mechanic or find alternative financing options to cover the cost of repairs or the deductible amount.

Will I get my car insurance deductible back?

If you are not at fault for an accident and your carrier can recover the cost of the damage from the at-fault driver’s insurance provider, you may be reimbursed for your deductible.[6]

Are there discounts to lower my deductible?

Yes, some insurance companies, such as The Hartford, offer lower costs for their car insurance deductibles if you maintain a clean driving record. However, these discount opportunities are not available in every state, so check with your insurer to review your options.[7]

Sources

  1. Insurance Information Institute. “Understanding Your Insurance Deductibles.” Accessed March 13, 2025.
  2. Liberty Mutual. “Car Insurance Deductibles: Frequently Asked Questions (FAQs).” Accessed March 12, 2025.
  3. Mercury Insurance. “Comprehensive Coverage.” Accessed March 11, 2025.
  4. California Department of Insurance. “Automobile Insurance,” Page 11. Accessed March 12, 2025.
  5. Kelley Blue Book. “How To Choose Your Car Insurance Deductible.” Accessed March 11, 2025.
  6. American Family Insurance. “Do I Pay My Auto Deductible When I’m Not At Fault?” Accessed March 13, 2025.
  7. The Hartford. “What Is a Car Insurance Deductible?” Accessed March 12, 2025.
About the Author
Preston Micalizio
Preston Micalizio
Auto Insurance Expert

Preston Micalizio writes insurance content for SmartFinancial. He brings three years of professional experience writing in various industries, from higher education to e-commerce. He strives to engage with the audience, provide accurate reporting and make complex subjects easily digestible.

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