If you have full coverage car insurance, your auto insurance policy includes at least one 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 (per claim) before your insurer will cover the rest.
Car insurance deductibles typically range from $100 to $2,500 depending on the type of coverage, and they don’t have to be the same allowing you to decide how much you’re willing to pay up front after an accident.
How to choose a car insurance deductible amount
When it comes to choosing a car insurance deductible amount, there’s no “wrong” way to pick.
It just comes down to your preference and budget: Would you prefer paying a higher deductible in the event of a claim if it means a lower car insurance premium? Or would you rather spend less money out of pocket after an accident, and pay higher car insurance rates over the length of your policy?
Let’s take a look at some sample quotes from GEICO for a 2011 Chevy Equinox to compare car insurance rates savings based on your comprehensive and collision deductible amount:
Rate for a 6-month policy
Regardless of what deductible amount you choose, you’re going to have to pay it out of pocket if you ever file a claim and need to use that coverage, so you should go with the amount of money you’d feel the most comfortable paying up front.
Car insurance deductible amounts can range between $100 and $2,500, but $500 is the most common deductible amount for comprehensive and collision coverages.
You usually can choose your deductible amount for each type of coverage that requires one, which means you can set one coverage deductible higher or lower than another.
A step-by-step guide to choosing car insurance deductible amounts:
When you shop for car insurance, you’ll have to choose deductible amounts for every type of coverage that requires one. Here’s how to figure out what your deductibles should be:
1. Figure out the value of your car
The less your car is worth, the less you’ll get from your car insurance company if it’s totaled in an accident. For example, if the actual cash value (ACV) of your car is just $1,500, your insurance company won’t pay any more than that to repair or replace it.
This means that even a minor fender bender could cause enough damage to total your car, and if you have a $500 deductible, you wouldn't get a check for more than $1,000 from your insurer.
The type of car you drive also matters. Drivers who own older, less valuable cars may choose not to have full coverage at all since they may cost more to insure than they're worth, or choose lower deductibles so they have to pay less out-of-pocket when they file a claim. But if you driver a newer, more valuable car, choosing a higher deductible may make more sense.
2. Evaluate your savings
How much can you afford to pay to repair your car after an accident? If paying $1,000 to get your car repaired would be a financial hardship, you would want to choose a lower deductible amount, even if it means paying slightly more for car insurance.
But if you can afford to pay $1,000 to repair or replace your car in the event that it’s damaged or totaled in an accident, choosing a $1,000 deductible can help lower your insurance rates. You just have to be prepared to actually shell out $1,000 of your own money towards repairs.
3. See how different deductible amounts affect your rates
Compare quotes from different car insurance companies and compare different deductible amounts you are considering for your policy. Get quotes for a policy with $500 deductible amounts and $1,000 deductible amounts and see how that affects the cost.
Depending on the company, you may see big changes in your rates from one deductible to another, or the difference may be so small that it isn’t worth it to you to choose the higher deductible amount.
4. Decide on your tolerance for risk
Even for the safest driver, there is always a chance you are going to be in an accident. If you are the type of person who is happy to take the risk of paying a large amount out-of-pocket toward a claim, choosing a $1,000 deductible (or higher) might be right for you.
But if you are the kind of person who has trouble sleeping at night thinking about all the “what ifs” in life, a lower deductible might be a better choice. It means you’ll pay slightly more for car insurance, but in the event of an accident, your car insurance company will cover more of the repair costs.
When do you pay the deductible for car insurance?
Technically, you must pay the deductible amount per claim before you can receive coverage, but this isn’t exactly how a claim works. Rather than paying up front, car insurance companies will just write you a check for your claim minus your deductible.
This means if you file a claim for $10,000 worth of damage after an accident and you have a $500 deductible, the insurance company will simply pay you $9,500 and you will be expected to cover the other $500 in repairs out of pocket.
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.
Car insurance coverage types with deductibles
Car insurance is made up of multiple types of coverage. Your policy may include several types of coverage that require deductibles, like:
Comprehensive coverage: Deductibles for comprehensive coverage, which covers damage to the vehicle from a non-driving peril, like extreme weather, theft and vandalism, are typically set at $500 or $1,000.
Collision coverage: Drivers can typically choose to pay $500 or $1,000 as their collision deductible. Collision insurance covers damage to your vehicle caused by an accident, regardless of who was at fault.
Mechanical breakdown insurance (MBI): MBI coverage covers repairs to all mechanical parts of a car, and the deductible is usually $250 up front.
Personal Injury Protection (PIP): Depending on your state, you may be required to have PIP coverage to cover your injuries after an accident, and it may or may not require a deductible.
Uninsured/underinsured motorist coverage (UM/UIM): Your UM/UIM coverage may also require you to pay a deductible, depending on your policy and the laws in your state.
How do car insurance deductibles work for different types of coverage?
Multiple types of car insurance coverage require deductibles, so you’ll see several deductibles listed on your declarations page. Your deductibles can also vary in amount, so you could decide to pay more out of pocket for one kind of coverage than another.
Someone who stores their car in their garage when they’re not driving 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 every day may decide to set a lower deductible for collision coverage to pay less up front in the event of an accident.
The insurance rates included in this article were based on a 42-year-old woman with a clean driving record insuring a 2011 Chevy Equinox LTZ.
For full coverage policies, the following liability limits were used:
Bodily injury liability: 100/300
Property damage liability: $100,000
Uninsured/underinsured motorist: 100/300