How Deductibles Work in Car Insurance

What a deductible is and how it affects your claim

A deductible is the amount of money you pay out of your own pocket when you file a claim. Your insurance company pays the rest, up to your policy limit. If you have a $500 deductible and your car damage costs $3,000 to repair, you pay $500 and your insurer pays $3,000. If the damage costs only $400, you pay the full $400 because it's less than your deductible — your insurance doesn't cover it at all.

The deductible applies separately to different types of coverage. You might have a $500 deductible for collision (damage from an accident) and a $250 deductible for comprehensive (damage from weather, theft, or vandalism). You choose these amounts when you buy your policy, and they stay the same unless you change them.

Higher deductibles lower your monthly premium. Lower deductibles raise it. This trade-off is the main decision you make when setting up your coverage: you're choosing how much risk you're willing to handle yourself versus how much you want to pay each month.

Key Takeaways

• You pay your deductible only when you file a claim, and only for the types of coverage that have a deductible attached.
• Collision and comprehensive coverage each have their own separate deductible, so you might pay two deductibles in one incident if both explore.
• Liability coverage (which pays for damage you cause to someone else) does not have a deductible — your insurer pays from the first dollar.
• Choosing a higher deductible reduces your monthly premium but means you'll pay more if you have an accident.

Which types of coverage have deductibles

Not all car insurance coverage uses a deductible. Liability coverage — which pays for injuries or property damage you cause to other people — has no deductible. When you cause an accident, your insurer pays the other person's medical bills and car repairs directly, with no out-of-pocket cost to you.

Collision coverage has a deductible. This covers damage to your own car when you hit something or something hits you, regardless of who is at fault. Comprehensive coverage also has a deductible. This covers damage from weather, theft, vandalism, or hitting an animal.

If you have a loan or lease on your car, your lender usually requires you to carry both collision and comprehensive. If you own the car outright, you can skip these coverages entirely and avoid the deductible question altogether — though you'd be responsible for all repair costs yourself.

How deductibles work when you file a claim

When you report a claim to your insurer, they send an adjuster to inspect the damage and estimate the repair cost. The adjuster's estimate is what your deductible is calculated from. If the estimate is $2,500 and your deductible is $500, you pay $500 and the insurer pays $2,000.

You typically pay the deductible to the repair shop, not to your insurance company. Many repair shops will bill your insurer directly for their portion and ask you to pay your deductible when you pick up the car. Some shops will let you pay the deductible later. This varies by shop, so ask when you drop off your vehicle.

If the repair cost is less than your deductible, you pay the full repair cost yourself and don't file a claim at all. Filing a claim you don't need can raise your premium later, so it's worth doing the math first.

Collision and comprehensive deductibles are separate

If a single incident involves both collision and comprehensive damage, you pay both deductibles. This is rare but possible. For example, if a tree falls on your parked car during a storm and then a passing car hits the damaged car, the tree damage is comprehensive and the car-on-car damage is collision. You'd pay your comprehensive deductible for the tree damage and your collision deductible for the other car's impact.

More commonly, you'll have one type of damage per incident. A fender-bender is collision only. Hail damage is comprehensive only. You choose the deductible amount for each type of coverage independently, so you might set collision at $500 and comprehensive at $250 if you live in an area with frequent hail but few accidents.

How deductible choices affect your premium

A higher deductible means you're taking on more financial risk, so insurers charge you less each month. The difference can be substantial. Raising your collision deductible from $250 to $1,000 might lower your monthly premium by $15 to $30, depending on your age, driving record, and location. Over a year, that's $180 to $360 in savings.

The trade-off is that if you have an accident, you'll pay $1,000 out of pocket instead of $250. This makes sense if you have savings to cover a larger deductible and rarely file claims. It makes less sense if you're living paycheck to paycheck and can't afford a surprise $1,000 bill.

Some people choose a high deductible for collision (since accidents are less common) and a low deductible for comprehensive (since weather and theft are more frequent and less predictable). Others do the opposite. There's no single right answer — it depends on your financial situation and how often you expect to file claims.

What happens if you can't pay your deductible

If your car is damaged and you can't afford your deductible, you have a few options. You can ask the repair shop if they'll let you pay the deductible in installments. Some shops offer payment plans, though not all do.

You can also choose not to file a claim and pay for repairs out of pocket if the damage is minor. If the damage is major and you can't pay the deductible, you may need to leave your car unrepaired or explore whether a personal loan or credit card advance is available to you.

Before you get into this situation, it's worth thinking through your deductible choice when you first buy the policy. If you can't comfortably afford your deductible in an emergency, it's too high for your circumstances.

Deductibles and uninsured or underinsured drivers

If another driver hits you and doesn't have insurance (or doesn't have enough insurance), you can file a claim under your own uninsured motorist or underinsured motorist coverage. These coverages typically have their own deductibles, though some insurers waive the deductible in uninsured motorist claims.

The rules vary by state and by insurer, so check your policy documents or call your insurer to understand what deductible applies if you're hit by an uninsured driver. In some cases, you may also have the option to file a claim against the other driver in small claims court to recover your deductible, though this requires proving they were at fault and that they have money or assets to collect from.

Frequently Asked Questions

Do I pay a deductible for liability coverage?

No. Liability coverage has no deductible. When you cause an accident, your insurer pays the other person's bills directly, starting from the first dollar. You only pay a deductible for collision and comprehensive coverage on your own vehicle.

Can I change my deductible after I buy my policy?

Yes. You can contact your insurer and request a deductible change at any time. The new deductible typically takes effect on your next billing date. Changing your deductible will adjust your monthly premium, so ask for a new quote before you confirm the change.

What if my repair bill is less than my deductible?

You pay the full repair bill yourself and don't file a claim. Filing a claim for damage less than your deductible wastes the claim and can raise your premium at renewal, so it's better to pay out of pocket in these situations.

Do I have to pay my deductible before the repair shop starts work?

No. Most repair shops will complete the work and bill your insurer, then ask you to pay your deductible when you pick up the car. Some shops may ask for the deductible upfront. Ask the shop about their payment process when you drop off your vehicle.

If I'm not at fault for an accident, do I still pay my deductible?

Yes, you pay your deductible to your own insurer when you file a collision claim, regardless of fault. However, your insurer may pursue the at-fault driver's insurer to recover your deductible. If they succeed, you'll be reimbursed. This process can take weeks or months.