Car insurance deductibles explained

Car insurance deductibles explained

December 03, 2019

What is a deductible? It's one of the most common car insurance questions and may be the easiest to answer: An auto insurance deductible is what you pay “out of pocket” on a claim. For instance, if you have a $500 deductible and $3,000 in damage from a covered accident, your insurer would pay $2,500 to repair your car. You're responsible for the remaining $500.

How do car insurance deductibles work?

Unlike health insurance, there are no annual deductibles to meet when it comes to auto insurance. You're responsible for your policy's stated deductible each time you file a claim. For example, if you total your car, your insurer will give you a payment for the vehicle's current value, minus your deductible. If your car is worth $35,000 and your deductible is $1,000, your insurer will pay you $34,000.

On the other hand, if the damage to your vehicle amounts to $800, and your deductible is $1,000, then your insurer will pay nothing, as they only cover damages above your deductible.

Comprehensive and collision are the two most common coverages that include deductibles. You may also have a deductible for personal injury protection or uninsured/underinsured motorist property damage in some states. Deductibles work exactly the same for all coverages.

What deductible should I choose for car insurance?

Deductible amounts typically range anywhere from $100 to $2,000. The most common deductible our drivers choose is $500, but know that there's never a wrong choice when selecting a deductible. It comes down to what you prefer:

Higher deductible = Lower car insurance rate and higher out of pocket costs

Lower deductible = Higher car insurance rate and lower out of pocket costs

Choose an amount you're comfortable with, but always consider the value of your vehicle. If your car is only worth $1,200, for instance, then it probably wouldn't make sense to choose a $1,000 deductible. Also, make sure you're able to afford your deductible in the event of a claim.

How likely are you to file a claim?

You might select a high deductible because you're betting against having an accident. Our data shows that 16% of our customers with comprehensive/collision coverage have a claim in a given year that would require them to pay their deductible. If you've had accidents in the past and you drive a lot on busier roads, you may be even more likely to file a claim.

When do you pay a car insurance deductible?

If your claim is approved, your deductible will be applied when your insurance company issues your payout. You won't ever have to write a check or make a payment to your insurer. They'll simply subtract your deductible amount from your claim's approved payout. So, if you have a claim approved for $5,000 and your deductible is $250, your insurance company will issue you a check for $4,750.

When you don't have to pay your deductible

A deductible won't apply to you in the following scenarios:

  1. An insured driver hits you

    If the other driver is officially deemed at fault, their insurance company can pay for your repairs if you choose, and you won't have to pay your deductible. Or, if you have collision coverage, you can choose to go through your own insurer who will seek reimbursement (including your deductible) from the other driver's insurance company. In situations where fault is shared, you may end up paying all or part of your deductible.

    Keep in mind, if you're hit by an uninsured or underinsured driver, a deductible may apply to your uninsured/underinsured motorist property damage coverage in certain states.

  2. Another person files a claim against your liability coverage

    There is no deductible on a liability claim. That means you pay nothing out of pocket for an accident claim in which your insurer pays for the damages and/or injuries you caused to another person, up to your policy's limits.

  3. You elected for no deductible

    In some states, you'll have the option to select a $0 deductible on your policy's comprehensive coverage.

  4. You have free repairs on glass claims

    At Progressive, in most states, if we can repair (instead of replace) any glass breakage, you won't have to pay your deductible.

Choose your deductible and get coverage from the Stansell Agency. Our local agents will look at rates from Progressive, Travelers, Nationwide, Encompass, Safeco, and other carriers to help you find the best coverage for the best price.