Car insurance deductible: What is it? How much is it?

A car insurance deductible is an amount you pay out-of-pocket before your insurance company covers the rest, up to your policy limits. The average car insurance deductible is usually set between $100 to $2,000, and you choose the level that fits your budget. Selecting lower car insurance deductible rates leads to higher monthly costs, while higher deductibles lead to lower monthly payments.

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A former insurance producer, Laura understands that education is key when it comes to buying insurance. She has happily dedicated many hours to helping her clients understand how the insurance marketplace works so they can find the best car, home, and life insurance products for their needs.

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Joel Ohman is the CEO of a private equity backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Jo...

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Reviewed by Joel Ohman
Founder & CFP® Joel Ohman

UPDATED: May 4, 2022

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Here's What You Need to Know

  • A car insurance deductible is an amount you pay out-of-pocket before your insurance company covers the rest
  • Collision, comprehensive, underinsured/uninsured motorist protection, and personal injury protection (PIP) insurance typically include deductibles
  • Deductible usually cost between $100 to $2,000 on average, and you get to choose your level

Car insurance deductibles are separate from your monthly or annual car insurance policy payment. Plus, only certain types of coverages include deductibles.

How do car insurance deductibles work? It’s the amount you pay out-of-pocket after filing a claim using coverage that includes deductibles, such as collision or comprehensive insurance.

So, if you invest in full coverage car insurance, knowing how deductibles work is a vital part of understanding your car insurance policy.

Below, learn how to buy car insurance with deductibles, when it applies, and determine how to choose the right deductible level for you.

After reading about how to choose an affordable car insurance deductible, enter your ZIP code into our free quote comparison tool above to receive rates from the top companies near you.

What is a car insurance deductible?

What does “deductible” mean in car insurance? It is a chosen amount a policyholder pays out-of-pocket before the insurance company covers the rest of the expenses up to the policy limits.

Ultimately, a deductible is separate from your monthly or annual policy premium. Plus, not all insurance types come with deductibles.

So, when do you pay the deductible for car insurance? You’re responsible for paying for your deductible whenever you file certain types of claims.

Imagine you’re involved in an accident causing $4,000 in damage to your vehicle, and you have a $1,000 collision deductible.

The table below shows the amount you, the policyholder, owe for the collision claim compared to what the insurance company pays.

Car Insurance Deductible Example
DetailsCost
Total cost of collision damage$4,000
Collision insurance deductible level$1,000
Amount insurance company pays$3,000
Amount policyholder pays$1,000
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In this example, your insurance company pays $3,000 of the claim, and you’re responsible for paying the remaining $1,000 — your hypothetical deductible amount.

You usually get to select your deductible level while finalizing your car insurance policy, so, in reality, it may be more or less than $1,000.

Plus, most companies allow you to change those limits at any time. However, changing your deductible amount will impact the cost of your car insurance policy.

Typically, lower deductible levels lead to higher monthly car insurance costs. Oppositely, higher deductibles amount to lower monthly rates.

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What types of car insurance have deductibles?

Now that you know what a deductible is, let’s discuss what types of insurance require them.

According to the Insurance Information Institute (III), deductibles typically apply to insurance coverages that pay for property damage, not the liability aspect of your insurance policy.

Collision insurance, comprehensive insurance, uninsured/underinsured motorist property damage, and personal injury protection (PIP) insurance typically include deductibles, subject to state laws.

Traditionally, insurance companies let you choose different deductible amounts for the different kinds of coverage.

For some coverages, you may have the option to choose a $0 deductible, but doing so leads to higher car insurance policy costs.

What types of car insurance don’t have deductibles? Usually, liability car insurance coverage and medical payments (MedPay) coverage do not include deductibles.

In at-fault states, you do not have to pay your deductible if the at-fault driver uses their liability insurance to cover the damage they caused to your vehicle. However, if an uninsured or underinsured motorist hits you, you may need to pay the associated deductible with that coverage.

Similarly, if someone else hits you and the claims process is taking too long, you can go through your collision insurance and pay the deductible up-front to speed up the process. Then, your insurance company can ask the at-fault driver’s company to reimburse your deductible in a process known as subrogation.

Other policy add-ons like roadside assistance insurance or rental car reimbursement do not typically include deductibles.

There may be coverage limits or caps on the number of claims you can file with these optional policy add-ons.

What is the average car insurance deductible?

The cost of car insurance deductibles depends largely on the overall level of insurance you choose.

The average car insurance deductible is usually between $100 to $2,000, but most drivers choose $500 deductibles. Typically, you’ll see options for $250, $500, $1,000, and $2,000 deductible amounts, but your available deductible amounts vary depending on what company you use.

Some companies offer something called a “diminishing” or “vanishing” deductible for an additional fee.

Details vary by company, but essentially, the longer you go without filing any claims, the more your insurance company reduces your deductible amount.

Typically, the reductions happen in $100 increments for every 12 months you remain claim-free. Traditionally, it resets as soon as you file a claim.

What should my car insurance deductible be?

Select a deductible that you can reasonably afford to pay yourself. Also, be careful not to choose too high of a limit, which could diminish the effectiveness of your policy type. For example, imagine an animal dents your vehicle. The average repair cost for a dent is between $125 to $500.

If you chose a $1,000 comprehensive insurance deductible limit, you would not be able to file a claim for this incident. Similarly, selecting higher deductibles usually means you’ll pay lower monthly car insurance rates. On the other hand, lower deductibles lead to higher monthly costs.

When choosing your deductible, decide if you want to pay less for car insurance or less for repairs.

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What happens if I cannot pay my deductible?

How does a car insurance deductible work if you cannot afford to pay it but need to file a claim?

If you cannot pay your deductible right away, it may delay the repair process for your vehicle. Some companies require you to pay your deductible before repairs begin.

Fortunately, you have some options. First, you might choose to wait to file your claim until you save up enough money to cover your deductible. However, if the accident was severe and your car was towed or is already at a mechanic’s shop, understand how long your vehicle can be stored and at what cost to you based on your policy details.

Alternatively, consider negotiating a payment plan with the repair shop. Since the insurance company typically writes a check for the repairs, the mechanic may be willing to discount the deductible portion you still owe. You can also discuss payment plan options with your insurance agent.

If the damage is only cosmetic and the vehicle is still safe to drive, it may not be necessary to file a claim at all.

Finally, as a last resort, if the damage is extensive and you need your car repaired as soon as possible, consider taking out a personal loan or a cash advance from a credit card.

Just be aware of any interest rates you might pay on the borrowed funds.

If it fits your budget, consider lowering your deductible amount to a cost you can afford to pay out-of-pocket right now before anything happens to your vehicle.

Just remember, this will cause your monthly premiums to increase.

Car Insurance Deductible: The Bottom Line

Car insurance deductibles are amounts the policyholder agrees to pay out-of-pocket for certain types of claims. These costs are separate from monthly or annual car insurance policy payments.

When it comes to how much your deductible covers, you have options. Choose a limit that comfortably fits your budget if you ever need to file a claim.

Remember, not all insurance types have deductibles. Those that don’t include liability insurance, optional rental car reimbursement, and roadside assistance policies.

Be prepared to choose deductibles if you live in a state that requires PIP insurance or uninsured/underinsured motorist protection.

Deductibles also apply if you invest in full coverage car insurance with collision and comprehensive coverage.

Now that you’ve learned how to select appropriate car insurance deductible rates, compare quotes from the best companies near you for free by entering your ZIP code into our rate tool below.

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