What is a car insurance deductible?
A car insurance coverage deductible is the money you pay toward an accident or a claim. Certain coverages require you to pay a deductible out of pocket. There may be deductibles for coverages such as comprehensive, collision, uninsured motorist property damage, and personal injury protection.
How does an auto insurance deductible work?
Let's say you have collision coverage, with a $250 deductible, and are involved in a car accident that causes $2,000 of damage to your vehicle. If you file a covered claim with your insurance company, then you will pay the $250 deductible and your insurance carrier will pay the remaining $1,750 towards your car repairs.
With some exceptions, you will pay a deductible for each loss you file under your auto insurance policy.
How do I choose the deductible amount?
In most situations, you may choose the deductible amount for each coverage. You should consider several factors when making this decision.
First, consider the dollar amount you want to be responsible for paying. In most situations, when you file a claim under a coverage that requires a deductible you will pay the deductible - so choose an amount you're comfortable paying out of pocket. You should consider choosing a deductible that you're able to pay.
Second, the deductible amount will impact your car insurance premium. If you choose a low deductible amount, then you'll likely be paying a higher insurance premium for the coverage. On the other hand, if you choose a high deductible amount, then you'll likely pay a lower insurance premium. You should compare and calculate how your deductible impacts your overall policy premium. Check out our coverage calculator to see what options look good to you.
Can a car insurance deductible be waived?
In most situations, for coverages with a deductible, a deductible will apply - but there are some circ*mstances in which the deductible may be waived. For example, if you have comprehensive coverage and make a claim to repair windshield glass damage, then your deductible may be waived. Check with your insurance representative to verify what deductibles apply. In some states, you may purchase additional auto insurance coverage that will waive your deductible in some scenarios. Check your state reference page for more information.
Now that you know more about how deductibles work, get a free car insurance quote from GEICO today.
Please note:
The above is meant as general information and as general policy descriptions to help you understand the different types of coverages. These descriptions do not refer to any specific contract of insurance and they do not modify any definitions, exclusions or any other provision expressly stated in any contracts of insurance. We encourage you to speak to your insurance representative and to read your policy contract to fully understand your coverages.
Some discounts, coverages, payment plans and features are not available in all states or all GEICO companies. Coverage is subject to the terms, limits and conditions of your policy contract.
FAQs
A car insurance coverage deductible is the money you pay toward an accident or a claim. Certain coverages require you to pay a deductible out of pocket. There may be deductibles for coverages such as comprehensive, collision, uninsured motorist property damage, and personal injury protection.
Is it better to have a $500 deductible or $1000? ›
If you're more likely to get into an accident, you won't want to pay out a higher deductible. However, if you're generally a safer driver, your car insurance premiums will be lower with a $1,000 deductible.
What should my deductible be for car insurance? ›
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.
Is it better to have a higher or lower car insurance deductible? ›
If you're leasing or financing your car or living on a tight budget, a lower deductible can give you more peace of mind. If you have a clean driving record or live in a low-traffic city, getting a high deductible could save you more money in the long run.
Is a $2000 deductible good for car insurance? ›
A $2,000 deductible is on the higher end of your options when buying car insurance. Many carriers offer deductibles as low as $100, limiting your out-of-pocket expenses following an accident or other damages. By choosing a higher deductible, such as $2,000, you may be able to drastically reduce your policy's premiums.
What is the disadvantage of having a higher deductible? ›
The main drawback to choosing an HDHP is having potentially high out-of-pocket expenses when you receive covered services during the year.
What is too high of a deductible? ›
The deductible is separate from the monthly premiums. For individuals, a health plan can qualify as high deductible if the deductible is at least $1,350, and the max out-of-pocket cost (the most you'd pay in a year for medical expenses, with insurance covering everything else) is at least $6,750.
Why is my deductible so high for car insurance? ›
You may opt for a higher car insurance deductible because you're betting against having an accident, but if you've had accidents in the past and often drive on busier roads, you may be more likely to file a claim and pay a deductible.
What if I can't pay my deductible car insurance? ›
If you cannot pay the full deductible up front after an accident, some repair shops may work with you on a payment plan. If you cannot pay the whole deductible, some shops may not start the repairs right away. Depending on your policy, your insurance company could also refuse to pay until you have paid your portion.
Do I want a high or low deductible? ›
If you are generally healthy and don't have pre-existing conditions, a plan with a higher deductible might be a better choice for you. Your monthly premium is lower since you're only visiting the doctor for annual checkups, and you're not in need of frequent health care services.
However, for most people, rental car insurance is an auto insurance policy that just wastes money. Even though rental car insurance seems to be very cheap compared to other kinds of coverage, if you don't anticipate renting cars, it is probably better to just drop rental car insurance altogether.
Can the color of your car affect your insurance premium? ›
The color of your car doesn't affect your insurance rate. Instead, your insurance company uses other information, like your car's age, location, usage, and your driving record, to help determine insurance rates. Learn more about the factors that impact auto insurance pricing.
How much does changing your deductible reduce your insurance premium? ›
Deductibles are what you pay before your insurance policy kicks in. By requesting higher deductibles, you can lower your costs substantially. For example, increasing your deductible from $200 to $500 could reduce your collision and comprehensive coverage cost by 15 to 30 percent.
What is the most common car insurance deductible? ›
The average auto insurance deductible is $500, but you could also select amounts like $250, $1,000 or $2,000; this will also affect your policy's premium. Choosing a higher deductible to get a lower premium may seem like an easy way to pay less for car insurance, but it's not always the best decision.
What should my comprehensive and collision deductibles be? ›
Both collision and comprehensive insurance generally have a car insurance deductible. Common deductibles are $250, $500, $1,000 and higher. So, if you get into an accident and your vehicle has $2,000 worth of damage and your deductible is $500, the insurance company would pay $1,500 for the claim.
What is a good amount for deductible? ›
Generally, drivers tend to have average deductibles of $500. Common deductible amounts also include $250, $1000, and $2000, according to WalletHub. You can also select separate comprehensive and collision coverage deductibles.
Is it better to pay a high or low deductible? ›
Key takeaways. Low deductibles are best when an illness or injury requires extensive medical care. High-deductible plans offer more manageable premiums and access to HSAs. HSAs offer a trio of tax benefits and can be a source of retirement income.
Is a $1,000 dollar deductible bad? ›
A $1,000 deductible is better than a $500 deductible if you can afford the increased out-of-pocket cost in the event of an accident, because a higher deductible means you'll pay lower premiums. Choosing an insurance deductible depends on the size of your emergency fund and how much you can afford for monthly premiums.
What is the advantage to having a high-deductible say $1000 to $1 5000 over $500 or less? ›
A higher deductible means a reduced cost in your insurance premium. For example, say your policy has a line of $5,000 in coverage. A low deductible of $500 means your insurance company is covering you for $4,500. A higher deductible of $1,000 means your company would then be covering you for only $4,000.
What is a good deductible amount? ›
What's the average car insurance deductible? There aren't any hard statistics on this, but industry sources say a $500 deductible is considered “standard.” There are good reasons to opt for a higher deductible, though…
