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What is a Car Insurance Deductible?

Last Updated on February 14, 2024 by Andy Walker


A car insurance deductible is the money you have to pay when you make a claim for damage to your car, like from an accident or bad weather. It applies to different types of coverage like comprehensive, collision, personal injury protection, or uninsured/underinsured motorist property damage.

For example, if your car gets damaged by hail and you want your insurance to help cover the repair costs, you file a claim. But, before the insurance company pays for the repairs, they subtract your deductible from the amount they give you. Deductibles are usually a set amount, like $500 or $1,000.

Here’s a simple breakdown:

  • Different coverages like comprehensive, collision, personal injury protection, and uninsured/underinsured motorist property damage have deductibles.
  • You get to choose your deductible amount.
  • Some states have rules about the deductible amount for personal injury protection.
  • Having a higher deductible often means you pay a lower insurance rate.
  • Whenever you make a claim, you’ll need to pay your deductible.
  • The deductible is subtracted from the money the insurance company gives you for your claim. You don’t directly pay the deductible to the insurance company.

What types of car insurance deductibles are there?

Your auto insurance policy is like a bundle of different protections. Some of these, like liability coverage, help pay for the other person’s injuries or damages if you’re at fault in an accident. There are also other types of coverage, such as comprehensive, collision, personal injury protection, and uninsured motorist property damage, which are there to help cover injuries to you and your passengers, as well as damage to your own car. With these coverages, you might have to pay a certain amount first before the insurance kicks in, which is called a deductible. This deductible can sometimes be adjusted to change how much you pay for your insurance.


  • This one helps if something happens to your car that’s not a crash, like theft or hail damage. The deductible is like a little fee you agree to pay when you need help fixing your car.
  • Tip: Sometimes, you might get a special deal where you don’t pay anything for certain damages, like chips in your windshield.


  • If you accidentally bump into something or someone, this one helps fix your car. The deductible is the small amount you pitch in to get your car looking good again.
  • Tip: You can choose how much this small amount is. If you’re okay with paying a bit more, your monthly payment might be less.

Uninsured and Underinsured Motorist Property Damage:

  • This one helps if someone without enough insurance damages your car. It’s like having a backup plan.
  • Tip: It might be optional, and you can decide if you want to pitch in a small amount (deductible) if you need to use it.

Personal Injury Protection (PIP):

  • This helps cover medical expenses for you and your passengers if you’re in a car accident.
  • Tip: It could be required in some places, and you might choose a small amount (deductible) that fits your budget.

So, these deductibles are like a little team effort—you pay a bit when your car needs help, and your insurance takes care of the rest. Easy peasy! 🚗

How Do Car Insurance Deductibles Work?

If your car got all banged up from hail, and it’ll cost $5,000 to fix it. Now, if you have car insurance with a $500 deductible, here’s how it works:

  • Cost Breakdown: The insurance company helps you out by giving you $5,000 to cover the repair. But, they take away $500 (that’s your deductible) from that money.
  • Your Responsibility: So, you end up with $4,500 to get your car fixed, and you need to pay the remaining $500. That $500 is your part of the deal.
  • Choosing Your Deductible: When you first get your insurance, you get to pick how much this deductible is. Most people go for $500, but it can be anywhere from $100 to $1,000 or even more, depending on the insurance company and where you live.
  • Changing It Up: If later on, you decide you want a different deductible, you can change it. Just know that the change won’t affect any problems your car had before the switch.

So, think of the deductible like a team effort. The insurance kicks in a big part, and you pitch in a bit when your car needs fixing.

When do you pay the deductible for car insurance?

Think of the auto insurance deductible like a little cost you might have to pay when something happens to your car. Here’s the deal:

  • When You Pay: Usually, if something goes wrong with your car, you’ll need to pay a small amount, and that’s your deductible. But guess what? There are times when you don’t have to pay for it!
  • Not Your Fault? No Problem: If someone else causes the accident, you might not need to pay anything. It’s like they cover the costs.
  • Liability Insurance Magic: If you’re at fault but have something called liability insurance, you might not need to pay the deductible either. This insurance helps with injuries and damages in accidents you’re responsible for.
    • Note: It works as long as the costs are within the coverage you bought.
  • Good Driving Perks: Imagine you drive really well and avoid accidents. Some insurances may reward you with something cool called a diminishing deductible. It means your deductible gets smaller or might even disappear over time.
  • Choosing Your Deductible: When you pick your deductible, think about how comfy you are with paying a bit more upfront or having a higher monthly cost. A higher deductible can make your overall insurance cost less, but if you ever need to fix your car, you’ll pay more at that time.

So, it’s like a little puzzle. You choose what fits your budget and how you want to handle costs when your car needs fixing.

How do car insurance deductibles impact premiums?

So, when you get car insurance, you can pick something called a deductible. It’s like a little cost you agree to pay if something happens to your car. Here’s the lowdown:

  • Big Deductible, Small Payment:
    • If you’re okay with paying more out of your pocket when your car needs fixing, you can choose a higher deductible. And guess what? Your monthly payment might be a bit less!
    • Tip: This works best if you’re sure you can handle the higher cost when you need it.
  • Small Deductible, More Monthly:
    • If you’d rather not pay a lot upfront when there’s an issue, go for a lower deductible. But keep in mind, your monthly payment might be a bit higher.
    • Tip: This is good if you prefer paying less each month, even if it means a bit more when you have to fix your car.
  • Choose Wisely:
    • Think about what fits your wallet. Can you easily pay more when your car needs help? Then go for a higher deductible. If not, stick with a lower one.
    • Tip: Be careful with lower deductibles. It might be tempting to fix every little thing, but too many claims can make your payment go up.

So, it’s like a money strategy game. You decide what works for you, and voila!

Average full coverage premium by deductible amount

Check this out: we’re sharing the average cost of car insurance at different deductible levels. We’re starting with a basic plan that has $500 for both comprehensive and collision deductibles. That’s why you won’t notice any change in the yearly cost for that level.

Comprehensive/Collision Deductible ($ amount)Average Annual Full Coverage PremiumAnnual Premium Impact*

*The effect on the cost is when you change deductibles from $500 for both comprehensive and collision coverage.

Making small adjustments to your deductible, such as switching from a $250 comprehensive deductible to a $500 comprehensive deductible, only slightly affect your premium. But, if you go for bigger changes, it can make a more noticeable difference. For example, if you currently have a $100 comprehensive deductible and a $500 collision deductible, increasing both to $1,000 could save you more than $500 per year, on average.

Frequently asked questions

Do you have to pay a deductible if you hit another car?

So, if you accidentally hit someone’s car, here’s what happens. You have different types of insurance on your policy. Some cover the other person’s stuff, like their car and injuries (no deductible needed). But, if you want your insurance to help fix your own car (with something called collision coverage), you need to pay a certain amount first—that’s your deductible.

What's a suitable collision deductible amount?

Choosing the right amount for something called a “collision deductible” depends on how much money you could pay if there’s an accident. If you have a lot of money saved up, like $1,000 or more, you might choose a higher deductible. This can make the overall cost of your insurance lower. But if you don’t have a lot of money to spare and want more help paying for accident costs, a lower deductible is probably a better idea. It’s all about what makes sense for you and your wallet.

Which is a smarter choice, a $500 or $1,000 deductible?

Insurance experts suggest picking a deductible amount that you can easily pay. If you want to pay less for your insurance each month, you can think about having a higher deductible, but only if you can manage it. If paying $1,000 at once doesn’t work for you, it’s okay to go for a lower deductible, even if it means a bit higher monthly payment. Also, think about how much your car is worth. If it’s only worth $1,500, having a $1,000 deductible means the insurance may cover only up to $500 for damages. It’s like finding the right balance for your car and your wallet.

What if I can't afford to pay my deductible?

If something happens to your car and you need to get it fixed with the help of your insurance, you might have to pay something called a deductible. It’s like a share of the cost that you need to cover. This is usually paid directly to the place fixing your car, and then your insurance takes care of the rest. It’s a good idea to pick a deductible amount that you can easily afford in case you ever need to use your insurance.

About The Author

Andy Walker is a freelance content writer who specializes in writing for insurance and finance related niches. He has years of experience in this field and has written extensively on a variety of topics. Andy’s work is always highly polished and well-researched, ensuring that his clients are always happy with the results.

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