What is a car insurance deductible?

Your car insurance deductible is the amount you are responsible for paying out of pocket when you file a claim with your insurer for a covered loss. Auto deductibles most commonly apply to collision and comprehensive claims, but some other coverage types may have deductibles as well. Your auto insurance deductible influences your premium, with a higher deductible yielding a lower premium and vice versa.

How does a deductible work for car insurance?

You may have come across the term “deductible” while shopping for coverage and asked yourself, “how does a deductible work for car insurance”? Put simply, it’s the portion you agree to cover out of pocket to repair or replace your vehicle following covered damage.

The liability portion of your car insurance policy doesn’t have a deductible. If you have comprehensive coverage, collision coverage or both, each would have its own deductible. These deductibles are applied separately. For instance, if your at-fault accident results in $5,000 worth of damage to your vehicle and you have a $500 collision deductible, the insurance company would cover up to $4,500, leaving you responsible for the $500 deductible.

Choosing a higher car insurance deductible typically lowers your premium since the insurance company won’t have to pay as much if you file a claim. But it also means you will have to pay more out of your pocket in the event of a claim where the deductible applies. You determine your auto insurance deductible amount with your insurance agent or carrier before finalizing your auto insurance policy. However, you should have the option to change your deductible at any time.

What types of car insurance deductibles are there?

Your auto insurance policy is a package of different coverage types. Some coverage types, like liability, may pay the other party for injuries and damages if you cause an accident. Other coverage types — such as comprehensive, collision, personal injury protection and uninsured motorist property damage — exist to help cover injuries to those in your vehicle and damage to your car. The latter may have deductibles, or at least the option to include a deductible to reduce the cost of coverage.

Here are a few coverage types that usually have a deductible or the option to choose one:

Comprehensive

Comprehensive coverage provides financial protection against damage to your vehicle caused by an incident other than a collision. This includes theft, fire, flood, vandalism, hail, falling rocks or trees and other hazards, such as hitting an animal. A comprehensive deductible is the amount you agree to pay to repair or replace your vehicle if you file a claim under your comprehensive coverage. If the repair costs are less than your comprehensive deductible, you would pay for the repairs yourself.

While there are many instances in which a deductible may apply, there are some scenarios where your comprehensive deductible does not apply. For example, you may have the option to purchase a “full glass” option on your comprehensive coverage. This means that if you have a chip or crack in your windshield, or any other glass-only damage to your vehicle, you won’t have to pay your comprehensive deductible at all. 

Several states don’t allow insurers to apply a deductible for glass replacement. Some insurers also offer zero-deductible comprehensive coverage, which means you would not pay anything if you filed a claim for any comprehensive damage, but your premium would be higher.

Collision

Collision coverage pays for damage to your vehicle resulting from an at-fault collision with an object, building or vehicle. Ite will not reimburse you for mechanical failure or normal wear-and-tear on your car. If you file a claim for damage to your vehicle under collision coverage, the collision deductible on your policy will apply.

Collision deductible options typically range from $0 to $2,500 and may even go higher. Collision coverage does cost money, so it’ll likely result in a higher premium, but you can control some of that premium with your deductible level. Just like with comprehensive, a higher deductible generally means a lower premium. 

Because collision claims tend to be more expensive than comprehensive claims, your collision deductible generally has a larger impact on your premium. If you choose not to add collision coverage to your policy, you may avoid a higher premium, but you will be responsible for paying for damage to your vehicle in a collision where you are at fault.

Uninsured and underinsured motorist property damage

Uninsured or underinsured motorist property damage coverage provides coverage if your vehicle is damaged by an uninsured or underinsured driver, and may also apply in hit-and-runs. This coverage is optional in most states, but required in others. 

You may have the option to choose a deductible if your state offers an uninsured and underinsured motorist property damage option. The bodily injury liability portion of these coverage types — which pays for your injuries and your passengers’ injuries if you’re hit by an uninsured or underinsured driver — generally does not have a deductible.

Personal injury protection

Depending on your state, you may be required to have personal injury protection (PIP) coverage on your policy, or it may be optional. In many states, it’s not offered at all. This coverage may help pay for medical expenses for you and the passengers in your vehicle. It may also help cover expenses related to lost wages or household responsibilities after an accident. 

You may have a deductible that applies if filing a claim under this coverage. Many states with PIP deductibles provide several options to choose from, and the deductible you choose can impact your premium.

What car insurance coverage types do not require a deductible?

Liability coverage is required in most states and helps cover injuries and property damage for the other party or parties if you are at fault in an accident. When you buy liability coverage, you will choose a specific amount of coverage. These coverage limits are the maximum amount the insurance company will pay the other party for a covered claim. As liability coverage is designed to cover the other party’s injuries and vehicle repairs, there is no deductible.

If you choose optional coverage types like roadside assistance or rental car reimbursement, there is generally no deductible, though there may be coverage limits and caps on the amount of claims you can file for these add-ons.

How do car insurance deductibles impact premiums?

Bankrate’s study of average car insurance premiums and deductible levels nationwide confirmed what our licensed agent team members already knew — generally, the higher your auto insurance deductible, the lower your premium. With higher deductibles, you are willing to pay more out of pocket in the event of a claim, so insurance companies charge you less, though what may be surprising is that the difference is not always significant. 

Keep in mind, too, that our study focused on drivers with clean driving records. If you have an accident or ticket surcharging on your policy, you may see bigger savings by increasing your deductibles. While your deductible level can be a tool to help you control your insurance premiums, it isn’t always the most effective way to save on your car insurance.

• Higher deductibles: Choosing higher car insurance deductibles might lead to a slightly cheaper car insurance premium. However, you should first consider if you can reasonably pay the deductible amounts at any given time without sacrificing your finances. If this isn’t the case, it might make sense to choose lower deductibles while having a slightly higher premium.
• Lower deductibles: Lower deductibles mean that you won’t have to pay as much out of pocket if you’re involved in a collision or comprehensive claim. While this is true, lower deductibles may also tempt drivers to file more frequent claims, which can raise your rates over time if you have too many at-fault incidents.

Learn more: The cheapest car insurance companies

Average full coverage premium by deductible amount

Below, we showcase the average cost of car insurance by various deductible levels. Our base profile rates include $500 comprehensive and $500 collision deductibles, which is why you see no annual premium impact for that level.

*Premium impact is adjusting deductibles from $500 comprehensive and collision deductible amounts

Small changes to your deductible levels — like changing from a $250 comprehensive deductible to a $500 comprehensive deductible — only moderately change your premium. However, larger changes can have a bigger impact. If you have a $100 comprehensive deductible and a $500 collision deductible, increasing to $1,000 for both could save you over $500 per year, on average.

How should I choose my car insurance deductible?

With so many choices in deductible levels available, you may be wondering how to choose the right one. It may be helpful to consider the following as you shop for a car insurance policy.

Do you want to pay less for car insurance or repairs?

A higher car insurance deductible will generally lower your insurance premium, but you will pay higher out-of-pocket costs if you file a claim for damage to your vehicle. Some claims may even be below your deductible amount, and you might have to pay the entire amount out of pocket. For example, if you back into a tree and do $350 worth of damage to your vehicle and your collision deductible is $1,000, you will pay out of pocket for all the repairs.

If you opt for a lower deductible, your car insurance rate will likely be higher, but you would have lower out-of-pocket costs if you file a claim. If your deductible is $100 and you cause $350 of vehicle damage by backing into a tree, you would only have to pay your $100 deductible, while your insurance would pay the other $250. However, you could spend more on your premium by having a lower deductible and never end up filing a claim. This is the nature of having insurance coverage and an example of the risk both you and the insurer take on.

How much can you afford to pay out of pocket?

Before you choose a deductible, most insurance professionals recommend you figure out what you can afford to pay if your car is damaged in an accident. If your budget allows for a maximum out-of-pocket expense of $500, you probably should not choose a deductible higher than $500. If you do, you may not be able to afford to fix your vehicle if you need to pay the deductible for repairs.

Does your lender have deductible requirements?

If your vehicle is financed or leased, your lender will likely require you to carry comprehensive and collision coverage for your vehicle. If that is the case, you will need to choose deductibles for each. Some lenders impose limits on comprehensive and collision deductibles. It is important to check with the financial institution that handles your loan or lease to determine if these restrictions exist.

What’s the claim risk in your area?

There are a variety of factors to consider when assessing the claim risk for your area. For instance, in population-dense areas, such as cities, the likelihood of a car accident taking place is much higher than in rural, sparsely populated areas. 

Similarly, severe weather events and natural disasters are other factors  to consider when assessing the claim risk in your area. If you live in a region that experiences more extreme weather, such as hail, snow or wildfires, it increases the risk that you’ll need to file a claim at some point with your insurance provider to cover weather-related or climate-related losses or damages.

Other factors to consider when assessing claim risk include the overall crime rate in your ZIP code and even the quality of the roads. If you ultimately determine that you’re in a high claim risk area, then choosing a lower deductible can make more sense since it means less money out of pocket in the event you need to file a claim. Conversely, if your claim risk appears to be low, then it may make sense to opt for a higher deductible, as car insurance companies typically charge less for policies that include a steep deductible.

When are you not required to pay your car insurance deductible?

Generally, you will not be required to pay your deductible in these scenarios. 

Another driver is at fault

If another driver is deemed at-fault in an incident and they are insured, you should not be responsible for paying a deductible on the claim that you file through their insurance company. Your deductibles only apply when filing a claim with your insurer.

You have a diminishing deductible

Some insurance companies offer a diminishing deductible or vanishing deductible option that could decrease or eliminate your deductible. This policy feature may reduce your deductible over time if you remain accident- and violation-free. For instance, your company may reward you with $100 off your deductible for each accident-free year. 

To illustrate, assume you have a $500 collision deductible and you do not have an accident or violation for four years. If you needed to file a claim, your deductible would be $100 instead of the original $500. Once you use your diminishing deductible, there is usually a time period to qualify for it again. This feature is not available from every carrier.

You purchase a full-glass option

If you have a full-glass option on your comprehensive coverage and the damage to your vehicle is limited to glass, you won’t have a deductible to pay. Not all companies offer this option, but it may be automatic in some states. Others do not allow insurers to charge a deductible for glass glass repair and replacement.

You have a collision deductible waiver

Some states and car insurance companies offer what’s known as a collision deductible waiver for an additional fee. If your policy includes this extra protection, you may be able to avoid paying a deductible if you’re involved in certain not-at-fault accidents where the other driver is identified, uninsured and found to be completely at fault for the collision.

Frequently asked questions

• Do you pay a deductible if you hit another car?
  

  A few different coverage types on your policy could kick in if you are deemed at-fault for an accident where you hit another car. Your bodily injury liability and property damage liability would pay for the damages and injuries to the other party and their vehicle, and those coverage types do not have a deductible. However, if you have collision coverage and want the insurance company to step in to cover the repairs to your vehicle, you would have to pay your collision deductible.

• What is a good amount for a collision deductible?
  

  When considering your collision deductible, it’s important to assess how much you would be reasonably able to pay yourself, should an accident occur. If you have ample emergency savings and could easily pay $1,000, $2,000 or more in the event of an accident, opting for a higher collision deductible may be a good choice in order to lower the overall cost of your policy. If you need protection from the out-of-pocket costs that you might incur as a result of a car accident, then a lower deductible is likely a good choice.

• Is it better to have a $500 or $1,000 deductible?
  

  Most insurance professionals recommend choosing a deductible you can comfortably afford to pay. If you want a lower premium, you could consider a higher deductible if you can afford it. However, if a $1,000 deductible is not feasible, it may make sense to take the lower deductible and pay a higher premium. When choosing a deductible, you might also consider the value of your car. For example, if your car is only worth $1,500, setting a $1,000 deductible means your insurance company may only be responsible for up to $500 in damages to the vehicle.

• What happens if I can’t pay my deductible?
  

  If you file a covered claim under a coverage type with a deductible, you may have to pay the deductible prior to work beginning on your damaged vehicle or before you can pick up the car once repaired. Most car insurance companies require you to pay the deductible directly to the repair shop, while the insurer would pay the balance minus your deductible. This is why most insurance professionals recommend choosing a deductible you can comfortably afford to pay in the event of a claim.

• Does my driving record affect my deductible?
  

  No, your driving record does not directly impact your deductible, but it does have an impact on what you pay for auto insurance coverage. You’re free to choose your deductible when you purchase a policy, but it should be an amount you can comfortably afford to pay should you need to file a claim. That said, you should consider your driving record when selecting this amount. Generally speaking, if you have a relatively clean driving record, a lower deductible might be ideal, even if you pay more out-of-pocket each month. Remember, your premiums will be lower in this case than someone with a poor driving record. So, you could still keep more of your hard-earned money in your pocket for opting for a lower deductible and paying slightly more in premiums in the event you have to file a claim.

Methodology

Bankrate utilizes Quadrant Information Services to analyze September 2024 rates for ZIP codes and carriers in all 50 states and Washington, D.C. Rates are weighted based on the population density in each geographic region. Quoted rates are based on a 40-year-old male and female driver with a clean driving record, good credit and the following full coverage limits:

• $100,000 bodily injury liability per person
• $300,000 bodily injury liability per accident
• $50,000 property damage liability per accident
• $100,000 uninsured motorist bodily injury per person
• $300,000 uninsured motorist bodily injury per accident
• $500 collision deductible
• $500 comprehensive deductible

Comprehensive deductible: Rates were calculated by evaluating our base profile with the following deductible amounts applied: $100, $250, $500 and $1,000.

Collision deductible: Rates were calculated by evaluating our base profile with the following deductible amounts applied: $500 and $1,000.

To determine minimum coverage limits, Bankrate used minimum coverage that meets each state’s requirements. Our base profile drivers own a 2022 Toyota Camry, commute five days a week and drive 12,000 miles annually.

These are sample rates and should only be used for comparative purposes.