How to choose a car insurance deductible amount

Since you may have to pay your car insurance deductible out of pocket before repairs are covered, you should choose an amount of money you feel comfortable paying up front.

Stephanie Nieves author photo


Stephanie Nieves

Stephanie Nieves

Editor & Home and Auto Insurance Expert

Stephanie Nieves is a former editor and insurance expert at Policygenius, where she covered home and auto insurance. Her work has also appeared in Business Insider, Money, HerMoney, PayScale, and The Muse.

Published July 21, 2020 | 5 min read

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Key Takeaways

  • A car insurance deductible is how much you’ll pay for certain covered claims before your car insurance will pay for the rest

  • Choosing a higher deductible leads to a lower premium, and a lower deductible will mean a higher premium

  • Coverage that requires a deductible includes comprehensive and collision insurance, mechanical breakdown insurance, and personal injury protection

If you have car insurance, chances are your policy includes a type of coverage that requires a deductible. A car insurance deductible is the amount of money you’ve agreed to pay for damage out of pocket before your insurer will cover the rest. Deductibles typically range from $100 to $2,000 depending on the type of coverage, but you generally get to decide how much you’re willing to pay upfront.

Comprehensive and collision insurance, which covers damage to your vehicle from perils like falling objects and vandalism as well as collisions, both require a deductible each time you use that coverage. Your deductible amount can be found in your declarations page or in your car insurance policy along with your coverage limits.

But other main coverage components, like liability coverage, which is required in almost every state, do not require a deductible, so you wouldn’t need to pay anything up-front for a covered liability claim.

You choose your deductible amounts when you buy a policy, and ultimately, setting a deductible for car insurance is a personal choice. Lower deductibles lead to a higher premium, and higher deductibles mean you’ll pay less month by month, but keep in mind that if you set a high deductible just for the lower premiums, you may actually need to pay it someday.

In this article:

What is a car insurance deductible?

A deductible is an amount of money you pay out of pocket towards a covered claim. Coverages that have deductibles, such as comprehensive and collision coverage, require you to pay a certain amount of money for the damage when you file a claim before your insurer will pay out the rest. Unlike a health insurance deductible, which adds up over time, your car insurance deductibles are required per claim. That means that if your comprehensive coverage deductible is set at $500, and you file two comp claims in a year, you’ll pay $500 each time.

Not all coverage requires a deductible, but those that do will be listed on your car insurance declarations page along with your vehicle information and coverage limits.

Car insurance deductible amounts for different coverage types can range between $100 and $2,000, which means you could be paying as much as $2,000 upfront for coverage depending on the deductible you choose.

Learn more about car insurance deductibles

How to choose a car insurance deductible amount

When it comes to choosing a deductible amount, there’s no “wrong” way to choose. It just comes down to your preference and budget: Would you prefer paying a higher deductible up-front for a lower car insurance premium? Or would you rather spend less money out of pocket, and pay higher car insurance rates over your term? Regardless of what deductible amount you choose, you’re going to have to pay it out of pocket if you ever file a claim on that coverage type, so you should go with the amount of money you feel the most comfortable paying up-front.

Car insurance deductible amounts can range between $100 and $2,000, with $500 being the most common for comp and collision. You usually have a choice of how much your deductible will be for each type of coverage that requires one, which means you can set one coverage deductible higher or lower than another.

When do you pay the deductible for car insurance?

You must pay the deductible amount per claim before you can receive coverage. Say you have a deductible of $1,000 for collision insurance, If you end up with two separate collision claims, you’d need to pay the $1,000 deductible for each claim before insurance will cover the rest.

In a scenario where your car was hit by another driver, you may have to wait for the other driver’s insurance company to finish their claim investigation before they can pay to fix anything for you. If you don’t want to wait for that process to make repairs on your car, you can use your own car insurance to file a claim on your collision insurance and pay the deductible to receive coverage.

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What if damage is less than the deductible?

When the cost to repair your car is less than or equal to your deductible amount, you’ll have to pay that amount out of pocket either way, so it’s not worth it to file a claim. Imagine your car’s roof is smashed by a fallen branch and the damage costs $300 to fix. If your deductible is $500, it’s best not to file a claim since the deductible amount is more than the cost of repairs. Remember that filing a claim can also lead to a rate increase, so if the cost of repairs is just slightly more than the cost of repairs, it still may not be worth it to file a claim.

It only makes sense to file a claim when the damage costs more than your deductible amount. Say your vehicle’s hood and doors are smashed in a collision and repairs come out to $1,500. You should file a claim and pay a deductible of up to $1,000 to receive payout from your collision insurance to cover the remaining five-hundred dollars of damage.

Car insurance coverage with deductibles

Car insurance is made up of multiple coverage components. You may have several types of coverage that require deductibles on your policy. Those coverages can include the following:

  • Comprehensive coverage - Deductibles for comprehensive coverage typically range between $500 and $1,000 Comp coverage covers damage to the vehicle from a non-driving peril, like extreme weather, theft and vandalism

  • Collision coverage - Drivers can typically choose to pay $500 or $1,000 as their collision coverage deductible. Collisions covers damage to your vehicle caused by an auto accident, regardless of who was at fault

  • Mechanical breakdown insurance - MBI coverage covers repairs to all mechanical parts of a car, and the deductible is usually $250 upfront

Depending on where you live, personal injury protection may require a deductible as well as uninsured/underinsured motorist coverage.

Car insurance without deductibles

A minimum amount of liability car insurance is required in almost every state. Liability coverage includes coverage for bodily injury and property damage that you cause in a car accident. Liability insurance does not require a deductible, your insurance company will pay out to whoever you injured or whoever’s property you damaged without you needing to pay a certain amount up-front.

How do car insurance deductibles work for different types of coverage?

Multiple parts of car insurance coverage require a deductible, so you see several deductibles listed on your car insurance policy. Your deductibles can also vary in amount, so you could decide to pay more out of pocket for one kind of coverage than another. That means you can set your comprehensive deductible to $1,000 and your collision deductible to $500.

Someone who stores their car in their garage when they’re not driving it may decide to set a higher deductible for comprehensive coverage if they believe their car is less likely to be damaged by anything other than a collision. Conversely, someone who commutes to a busy, crowded city everyday may decide to set a lower deductible for collision coverage to pay less up-front in the event of an accident.