Lowering Your Car Insurance Deductible

You can lower your car insurance deductible in exchange for higher monthly rates. Most car insurance companies offer deductibles at $250 or $500, but some go as high as $1,000. Higher deductibles mean lower car insurance rates, but lowering your car insurance deductibles can significantly lower your out-of-pocket costs in the event of an accident.

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Zaneta Wood, Ed.S. has over 15 years of experience in research and technical writing bringing a keen understanding of data analysis and information synthesis to reach a wide variety of audiences. She studied adult education and instructional technology at Appalachian State University as well as technical and professional communication at East Carolina University. Zaneta has prepared technical p...

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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®

UPDATED: Jan 19, 2021

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Here's what you need to know...

  • Lowering your insurance deductible usually means an increase in your premiums
  • A high deductible shows the insurance company that you are willing to be financially responsible
  • Insurance providers usually only offer two options for deductibles
  • Know what your insurance company requires regarding paying out claims

It is easy to lower your car insurance deductible. All you need to do is go online and change your insurance policy. Just keep in mind that doing this will restart your contract and increase your premiums.

If you can’t manage your account online, you can also contact your car insurance company directly. Before you make the change, however, you should get a quote from multiple companies to see if anyone else can offer you a lower rate.

Type your ZIP code into the box above to compare car insurance quotes from multiple companies!

Will my rates increase if I decrease my deductible?

Your car insurance deductible is the amount of money that you pay out of pocket when and if you cause a car accident. The insurance company bases part of your insurance rate on how much you are willing to pay out of pocket if an accident occurs.

The higher your deductible is, the cheaper your premiums are going to be.

A high deductible means that you are taking responsibility for more of the costs associated with the accident.

Insurance companies aren’t saving a ton of money if you have a $20,000 accident and you pay $500 out of pocket, but they will lower your car insurance costs quite a bit if you choose the $500 deductible over the $250.

Why? Because you are more financially involved in your driving than someone with a lower deductible.

According to the Insurance Information Institute’s article on “Understanding Your Insurance Deductible,” insurance costs are lower for people with a higher deductible because the deductible represents a shared risk between the insurer and the insured.

Additionally, if you have a small accident, you are less likely to file a claim if you have a higher deductible, which saves the insurance company money. Even if you do file a claim, the financial responsibility of the provider will be minimal.

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When should I decrease my deductible?

Some insurers will tell you that it’s never a good time to lower your deductible. However, if you can’t afford $500 to $1,000 out of pocket at one time, then you should consider lowering your deductible.

For many people it is easier to make a smaller monthly payment than it is to save a larger sum of money.

What’s more, if you have more than one accident, then it is unlikely that your monthly premium requirements will exceed the amount that you pay out of pocket, especially if you have a high-dollar deductible.

However, if you have too many accidents, your car insurance premiums may get out of hand, especially if you cause the accidents.

What are my insurance deductible options?

The amount of your deductible can depend on the car insurance company that you choose.

Many companies only offer two options: $250 and $500. However, some companies allow you to choose deductibles over $1,000.

Keep in mind that after a while there is no financial benefit to choosing such a high deductible in terms of premium savings.

Some companies also offer the option of no deductible, although this is becoming rarer. Remember that this will be the most expensive option regarding your premiums.

What if I can’t afford to pay my deductible after an accident?

If you have trouble paying your deductible, companies usually take one of two paths when paying a claim.

The first path is to pay a check to cover the cost of your claim, minus your deductible. If this is the case, then all you have to do is find a mechanic who will take care of your repairs with the amount that you received from the insurance company.

Many mechanics are willing to offer a discount for a large job or waive certain fees to help you out.

The other path is that the insurance company pays the mechanic directly and only for the costs of the repairs. If this happens, then you could be in trouble in terms of your deductible.

Talk to the mechanic and see if you can work out a payment plan. Many are very flexible about this, especially if they have been paid for the rest of the work.

Use the FREE quote tool at the bottom of the page by entering your zip code to compare car insurance rates side by side!


  1. https://www.21st.com/auto-insurance-information/understanding-car-insurance-deductibles.htm
  2. https://www.iii.org/articles/understanding-your-insurance-deductible.html
  3. https://www.thesimpledollar.com/raising-deductibles-to-save-money-on-insurance-does-it-work/
  4. https://www.businessweek.com/stories/2007-02-15/car-insurance-take-the-high-roadbusinessweek-business-news-stock-market-and-financial-advice

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