How Car Insurance Deductibles Work and What They Cost You

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 for damage to your car. Your insurance company pays the rest, up to your policy limit. If you cause an accident that costs $5,000 to repair and your deductible is $500, you pay $500 and your insurer pays $4,500. If the damage costs $300, you pay the full $300 because it is less than your deductible — your insurance does not pay anything.

The deductible applies separately to different types of coverage. You might have one deductible for collision (damage from hitting another car or object) and a different deductible for comprehensive (damage from theft, weather, or vandalism). Some policies also let you set a deductible for uninsured motorist coverage. Your liability coverage — which pays for damage you cause to someone else's property or injuries — does not have a deductible.

Choosing a deductible is a trade-off between your monthly premium and your out-of-pocket cost when something happens. A higher deductible lowers your premium. A lower deductible raises your premium but means you pay less if you need to file a claim.

Key Takeaways

• You choose your deductible amount when you buy or renew your policy, and common options range from $250 to $1,000, though some insurers offer other amounts.
• A higher deductible reduces your monthly premium, while a lower deductible increases it.
• Your deductible applies only to collision and comprehensive coverage, not to liability coverage that pays for damage you cause to others.
• If your repair bill is less than your deductible, you pay the entire bill yourself and your insurance does not pay anything.
• You can often change your deductible when you renew your policy, so you can adjust it if your financial situation changes.

Common deductible amounts and how they affect your premium

Most insurance companies offer deductibles of $250, $500, $750, and $1,000. Some insurers also offer $100, $1,500, or $2,500 options. The exact amounts available depend on your insurer and sometimes on your state. The relationship between deductible and premium is straightforward: moving from a $500 deductible to a $1,000 deductible typically lowers your premium by 10 to 25 percent, though the exact savings varies by insurer, your driving record, your location, and the type of car you drive.

A lower deductible costs more per month but protects you if you have an accident soon after buying the policy. A higher deductible costs less per month but means a larger bill if you need to file a claim. Neither choice is automatically right — it depends on how much you can afford to pay if your car is damaged, how often you drive, and how long you plan to keep the policy.

When you pay your deductible and when you do not

You pay your deductible only when you file a claim for collision or comprehensive damage and your insurer approves the claim. You do not pay it for liability claims, because liability coverage has no deductible — your insurer pays the full amount (up to your policy limit) for damage you cause to someone else's car or property.

If you are hit by an uninsured driver and you have uninsured motorist property damage coverage, you may have a deductible for that claim too, depending on your policy. If you are hit by an insured driver and you file a claim against their insurance, you do not pay your own deductible — their insurer pays. However, if you file a claim against your own collision coverage instead (which can be faster), you pay your deductible.

If the repair bill is less than your deductible, your insurance does not pay anything. For example, if your deductible is $750 and a broken window costs $400 to fix, you pay $400 out of pocket. This is true even if you have comprehensive coverage that would normally cover the damage.

Deductibles for collision versus comprehensive coverage

You can set different deductibles for collision and comprehensive coverage. Many people choose a higher deductible for comprehensive (say, $1,000) because comprehensive claims are less common, and a lower deductible for collision (say, $500) because collision is more likely if you drive regularly. Some people do the opposite, or choose the same amount for both.

Collision covers damage when your car hits another vehicle, a building, a tree, or any other object. Comprehensive covers damage from theft, vandalism, weather (hail, flooding, wind), animal strikes, and broken glass. Because comprehensive damage is often less predictable and sometimes happens to parked cars, some drivers feel more comfortable with a lower deductible for it. Others reason that they are less likely to file a comprehensive claim, so they accept a higher deductible to save on premiums.

How to choose a deductible that fits your situation

Start by asking yourself how much you could pay out of pocket if your car were damaged today. If you have $1,000 in savings and could handle that expense, a $1,000 deductible might make sense because your premium will be lower. If you have $500 in savings and a $1,000 deductible would strain you, a $500 deductible is probably safer even if the premium is higher.

Consider also how often you drive and where. If you drive a long commute on busy highways, collision is more likely, so a lower collision deductible might be worth the higher premium. If you park in a garage and drive rarely, you might accept a higher deductible. If you live in an area with frequent hail or theft, a lower comprehensive deductible could make sense.

Your age and driving record matter too. If you are a new driver or have recent accidents or tickets, you are statistically more likely to file a claim, so a lower deductible protects you more. If you have a clean record and have not filed a claim in years, a higher deductible saves you money on premiums with less risk.

Changing your deductible

You can usually change your deductible when you renew your policy, and some insurers let you change it mid-policy for a fee or without one. If your financial situation improves, you might raise your deductible to lower your premium. If you are worried about affording a large repair bill, you might lower it. Contact your insurer to ask whether they allow mid-policy changes and what the process is.

Keep in mind that if you lower your deductible, the new deductible applies to claims filed after the change takes effect — it does not explore to damage that already happened. If you raise your deductible, the change also takes effect on the date your insurer processes it, so any claim filed after that date uses the new, higher deductible.

Frequently Asked Questions

Does my deductible explore if someone else hits me?

No, if you file a claim against the other driver's liability insurance, their insurer pays for your repairs and you do not pay a deductible. If you file a claim against your own collision coverage instead (which can be faster if the other driver's insurer is slow), you pay your collision deductible.

What happens if my repair bill is less than my deductible?

You pay the full repair bill yourself. Your insurance does not pay anything because the damage is below your deductible. This is true even if you have the coverage that would normally explore to that type of damage.

Can I have different deductibles for collision and comprehensive?

Yes. Many insurers let you choose one deductible for collision and a separate one for comprehensive. Some people choose a higher deductible for comprehensive (which is less common) and a lower one for collision (which is more likely with regular driving).

Will raising my deductible lower my premium?

Yes, raising your deductible typically lowers your monthly or annual premium. The savings depend on your insurer, your driving record, your location, and your car. You can ask your insurer for a quote at different deductible levels to see the exact difference.

Can I change my deductible after I buy my policy?

Most insurers let you change your deductible when you renew. Some allow mid-policy changes for a fee or without one. Contact your insurer to ask what their policy is and how to make the change.