What should I do if I can’t afford my deductible?

What if I can't afford my car insurance deductible? Unfortunately, there aren't many options if you can't afford your car insurance deductible. Insurance companies will not pay for anything until that deductible is met. If you can't afford it, then choose a policy with lower deductibles. This could increase your car insurance rates, so comparison shop online now to find affordable car insurance deductibles with our comparison tool below.

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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 22, 2021

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Here's what you need to know...

  • The price of premiums and deductibles are two major factors when choosing a car insurance policy
  • If you have a high deductible, you will have to pay your portion before your insurance company pays out
  • Setting aside a specific amount of money in a savings account is the best way to save towards your deductible

No matter how much your car insurance deductible is, you will need to pay that deductible before the insurance company paying out their share of any claim.

What happens if you can’t pay your deductible? If you are in the situation where you need to submit a claim but can’t afford your deductible, you do not have many options.

However, there are a couple of things you can do to try to save money on your deductible. Read on and then be sure to enter your zip code above to compare car insurance options!

Deductible Versus Car Insurance Premium

When people purchase car insurance, they frequently shop around for the best deals. Sometimes this includes choosing a higher deductible policy in order to reduce the premium.

There are two factors to consider when determining which deductible amount to choose. The first is the difference in premium and the second is the out of pocket expense.

If you can afford the out of pocket expense on the higher deductible, then it is usually a good idea to go ahead and purchase the policy with the higher deductible and the lower premium.

However, if you cannot afford the higher deductible, then it may be better to pay for a lower deductible even though it will cost you more on your premiums overall.

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Lowering My Car Insurance Deductible

If you currently have car insurance and don’t think you can afford your deductible, then you should discuss it with your insurance agent or shop around for some other quotes.

Before trying to lower your deductible, find out if there are any options available that can help you reduce your current premium. If you can lower your premium, then you have an opportunity to set the savings aside for future use toward your deductible.

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Paying for My Car Insurance Deductible

When you bought your car insurance, you probably didn’t have concerns about your deductible. Perhaps you placed your deductible amount in a savings account but needed it as emergency money to repair a broken appliance, or maybe you needed a new set of tires.

If the day comes when you have a claim but are unable to afford your deductible, you have a couple of options.

If you have an accident, it needs to be reported to the car insurance company right away. However, not all repairs need to be done that quickly. For example, if your car is involved in an accident and the front end of your car is dented, then you may be able to wait to have your car repaired.

Some insurance companies cut a check based on estimates, although other companies issue the check to the repair shop. You will need to find out how much time you have to get your car fixed if the latter issue applies to your situation.

Under dire situations, you may need to tap into an emergency fund or borrow money for your deductible. Payday loans are cash advances that loan you money until your next paycheck. The interest rates are usually high, so it’s not the ideal situation.

Setting aside a specific amount of money in a savings account is the best way to save towards your deductible. As you can save more, you can always add to the savings account and increase your deductible, which will lower your premiums and save you more money.

To compare rates on premiums and deductibles from a number of popular providers in your area, enter your zip code below!

References:

  1. https://www.thebalance.com/what-is-out-of-pocket-527310
  2. https://www.allstate.com/tools-and-resources/car-insurance/help-lower-auto-premiums.aspx
  3. https://www.daveramsey.com/blog/3-questions-emergency-fund
  4. https://www.consumerfinance.gov/askcfpb/1567/what-payday-loan.html
  5. https://www.usatoday.com/story/money/personalfinance/2014/09/01/saving-new-car/14804239/

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