Your deductible is the amount you pay out of your own pocket when you file a claim
When you have a collision, theft, or other covered loss, your insurance company will pay for repairs or replacement minus your deductible. If your deductible is $500 and the damage costs $3,000, you pay $500 and your insurer pays $2,500. If the damage costs $400, you pay the full $400 because it's below your deductible — your insurance doesn't kick in at all.
Deductibles apply to collision and comprehensive coverage, which are the parts of your policy that cover damage to your own vehicle. They do not apply to liability coverage, which pays for damage you cause to someone else's car or property. Most states require liability coverage; deductibles on collision and comprehensive are your choice.
The deductible you choose directly affects your monthly premium. A higher deductible means lower monthly payments but more money out of your pocket if you have an accident. A lower deductible means higher monthly payments but less you'll owe when you file a claim.
Key Takeaways
- Your deductible is what you pay toward a claim; your insurance company pays the rest up to your coverage limit.
- Common deductible amounts are $250, $500, $1,000, and $2,500, though you can often choose any amount your insurer offers.
- Raising your deductible from $500 to $1,000 typically lowers your monthly premium by 15 to 30 percent, depending on your insurer and location.
- Deductibles apply only to collision and comprehensive coverage, not to liability coverage that protects the other driver.
- You should have enough savings to cover your deductible if an accident happens, or you may struggle to get your car repaired.
Common deductible amounts and how they affect your premium
Most insurers offer deductibles in increments: $250, $500, $1,000, and $2,500 are standard. Some companies allow $100 or $5,000 deductibles, and a few let you set a custom amount. The exact options depend on your insurer and state.
The relationship between deductible and premium is straightforward: the higher your deductible, the lower your monthly or annual cost. Jumping from $500 to $1,000 typically saves 15 to 30 percent on collision and comprehensive premiums, but the exact savings varies by insurer, your driving record, your location, and the age and value of your car. A newer car with high repair costs may show bigger savings; an older car with lower repair costs may show smaller ones.
You can set different deductibles for collision and comprehensive. Many people choose a higher deductible for comprehensive (which covers theft, weather, and vandalism — less common claims) and a lower one for collision (which covers accidents — more likely). For example, $500 collision and $1,000 comprehensive is a common combination.
How to decide what deductible makes sense for your situation
The right deductible depends on two things: how much you can afford to pay if you have an accident, and how often you expect to file a claim. If you have $2,000 in savings and choose a $2,500 deductible, you cannot afford to pay it if you crash. If you have $10,000 in savings and a safe driving record, a higher deductible may save you money over time.
Consider your driving habits and history. If you have had multiple accidents or live in an area with frequent theft or weather damage, you are more likely to file a claim, which argues for a lower deductible. If you have a clean record and drive mainly on highways, a higher deductible may make financial sense.
Also think about your car's value. If you drive a 15-year-old car worth $3,000, a $1,000 deductible means you are paying a third of the car's value out of pocket for a major accident. In that case, a lower deductible or dropping collision coverage altogether may be smarter. If you drive a new car worth $30,000, a $1,000 deductible is a smaller percentage and may be reasonable.
What happens if you cannot pay your deductible
If you have an accident and cannot pay your deductible, you cannot get your car repaired through insurance. The repair shop will not start work without payment, and your insurer will not pay their portion until you pay yours. You will be stuck with a damaged car and no way to fix it.
Some repair shops offer financing for deductibles, though this adds interest and fees. Some credit cards offer 0% introductory periods if you can pay off the balance quickly. Neither is ideal, which is why financial advisors recommend keeping your deductible amount in a separate savings account before you need it.
If you are in an accident caused by another driver, you may be able to recover your deductible from their insurance company through a process called subrogation, but this takes time and is not may provide. Do not count on it.
Deductibles for different types of coverage
Collision and comprehensive coverage both have deductibles you choose. Liability coverage — which pays for damage you cause to someone else — does not have a deductible. You pay your chosen deductible only when you file a claim on your own vehicle.
Some insurers offer a $0 deductible for comprehensive coverage if you bundle home and auto insurance, or as a discount for good driving. A few offer accident forgiveness, which means your deductible does not increase after your first accident, though you still pay the deductible amount itself.
Uninsured motorist coverage (which protects you if hit by someone without insurance) may have its own deductible, usually matching your collision deductible. Check your policy to see what applies.
When you might want to raise or lower your deductible
Raise your deductible if you have built up savings, your driving record is clean, and you want to lower your monthly payments. This makes sense if you are confident you will not need to file a claim soon and can absorb the higher out-of-pocket cost if you do.
Lower your deductible if you have had recent accidents, live in an area with high theft or weather damage, or do not have much savings. The higher monthly cost is worth the protection if you are likely to file a claim or cannot afford a large deductible payment.
You can change your deductible at any time — you do not have to wait for your policy to renew. Call your insurer or log into your account to adjust it. The change usually takes effect immediately or within a few days.
Frequently Asked Questions
Does my deductible apply to liability coverage?
No. Liability coverage has no deductible. If you cause an accident, your insurance pays the other driver's medical bills and car damage (up to your coverage limit) with no out-of-pocket cost to you. Your deductible applies only to collision and comprehensive coverage, which repair your own car.
Can I have different deductibles for collision and comprehensive?
Yes. Most insurers let you set them separately. Many people choose a lower deductible for collision (accidents) because they are more likely, and a higher deductible for comprehensive (theft, weather, vandalism) because those claims are less common. This combination can lower your overall premium while keeping protection where you need it most.
What if I get hit by an uninsured driver?
If you have uninsured motorist collision coverage, you file a claim on your own policy and pay your collision deductible. Your insurer then tries to recover that money from the other driver, but this process takes time and is not may provide. Some states allow you to waive the deductible for uninsured motorist claims; check your policy or ask your agent.
Does my deductible reset after I file a claim?
No. Your deductible is per claim, not per year. If you file two separate claims in one year, you pay your deductible for each one. The deductible amount itself does not change unless you call your insurer and ask to adjust it.
Should I choose the lowest deductible available?
Not necessarily. A very low deductible ($100 or $250) means a high monthly premium. If you have good savings and a clean driving record, a higher deductible ($1,000 or $1,500) may save you money over time. The best choice depends on your financial situation and how often you expect to file a claim.