What Is a Car Insurance Deductible?

A car insurance deductible is the amount of money you’ll pay out of pocket when filing an insurance claim. Once you pay the deductible, your insurer will cover any remaining car repair expenses, up to your coverage limit.

Both collision and comprehensive insurance typically require separate deductibles, and you’ll choose the deductible amount when you first apply for the auto insurance policy. The higher your deductible, the lower your insurance claim payout will be.1

But a higher deductible does lower your monthly insurance premiums, which can help you save money. If you’re comparing car insurance quotes, it’s important to learn how deductibles work.

How car insurance deductibles work

When you file an insurance claim, your deductible is the amount your insurer will subtract from your insurance payout. Car insurance deductibles are usually a set amount.

For example, let’s say you back into a light pole, causing $2,500 in covered damage to your car. Imagine you have a collision deductible of $1,000, which is a relatively high deductible. After subtracting your deductible amount from the claim payout amount, your insurance company sends you a check for $1,500.

In comparison, if your deductible were only $500, you’d receive an insurance payout of $2,000.

When you have to pay a deductible

Here are some common scenarios when a deductible would apply:

• You cause an accident that results in damages to your vehicle.

• You have to use comprehensive coverage to pay for damage to your car.

• You’re involved in an accident where the fault is shared among both drivers.

When a deductible doesn’t apply

Here are some scenarios when a car insurance deductible doesn’t apply:

• A claim under your liability coverage never has a deductible, regardless of the state.

• If the other driver is found at fault for the accident, their liability coverage will pay for damage to your vehicle.

• A deductible won’t apply if you have a zero-deductible policy or a diminishing deductible endorsement on your car insurance policy.

• Some insurance companies will waive the deductible if you have to repair your car windshield rather than replace it.

• Some states and insurance companies will waive the deductible if an uninsured or underinsured motorist hits you.

• In some states, windshield repair, covered under your comprehensive, has no deductible.

Types of auto coverage with deductibles

Not all types of auto insurance require paying a deductible. A deductible is only required if you file a claim under one of the following types of coverage.

How your deductible affects your car insurance premium

Deductibles don’t just affect your insurance payouts after an accident — they also help determine your monthly premiums. A deductible is how you share risk with the insurance company.

A higher deductible means you’re taking on more risk, so you’ll pay a lower premium. A lower deductible means you’re taking on less risk, so you’ll pay a higher premium.

What if your deductible amount exceeds repair costs?

In some cases, your deductible may exceed the necessary repair costs. For example, let’s say your windshield needs to be replaced, and the estimated cost is $500. If you have a $1,000 deductible, you won’t want to file a claim since your insurer won’t pay anything for the repair. It's worth noting that Florida, Kentucky, and South Carolina do not have deductibles for windshield repairs.

How to choose a car insurance deductible amount

Since your deductible amount affects your monthly premiums, you want to think carefully about what to choose. Typical deductible amounts are $250, $500, and $1,000, with a $500 deductible being the most common.3 

Here are some factors to consider:

• Your financial situation: Choosing a $1,000 deductible can help you save money on car insurance, but make sure you can afford to pay that out of pocket if you’re involved in an accident. If you can’t, you may want to consider a lower deductible.

• Your driving habits: It’s important to consider how likely you are to file a claim and whether you have a history of claims due to poor driving.

• Your car’s value: If your car is worth less than $1,000, you may not need comprehensive or collision insurance since any claim won’t be higher than the car’s value.

When to adjust your deductible amount

You can change your deductible amount at any time, and your insurer will adjust your premiums accordingly. That’s because as your situation changes, you may need to make changes to your policy. For example, if you buy a higher-value car, you may want to increase your insurance coverage and lower your deductible.

What is a vanishing deductible?

Some insurance companies offer a reduced deductible for each year you go without an accident. Allstate and Liberty Mutual offer vanishing deductibles, but not all insurance companies do. And many don’t advertise this benefit, so you’ll have to do your research. Check with your insurance agent to see which carriers offer this benefit.

Car insurance deductible FAQs