What is a car insurance deductible and how does it work?

If you file a claim after a covered incident, you’ll need to pay your car insurance deductible to get a payout for the remainder of the cost of damages. This out-of-pocket cost to you is listed in your policy and typically ranges between $100 and $2,000.

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Tonya Sisler has a Bachelor’s Degree from the University of South Carolina in Journalism and has worked for 15+ years in management. She has also completed a proofreading certification and is currently a professional writer.

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Brad Larson has been in the insurance industry for more than a dozen years. He started out as a claims adjuster for a national carrier. He has since switched to the agency side of the business. Brad is licensed in all P&C lines.

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Reviewed by Brad Larsen
Licensed Auto Insurance Agent Brad Larsen

UPDATED: Feb 2, 2022

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Things to Know

  • Your car insurance deductible is an out-of-pocket expense that you’ll have to pay after you file a claim to receive your insurance payout
  • You may be required to pay the amount up front, or your insurance company may send you the payout after subtracting your deductible from the total
  • Selecting a higher deductible can provide lower insurance rates because you’re reducing the risk to the insurance company

If you have car insurance questions, you’ve come to the right place. Today, we’ll determine the car insurance deductible basics. What is an average collision deductible? What is a car insurance deductible? What should my deductible be? How does a car insurance deductible work?

Continue reading for an explanation of the insurance deductible.

Having the right car insurance deductible is one way that you can save on your rates. Another way to save is by comparison shopping. You can get started right now when you enter your ZIP code into the tool on this page to obtain free quotes from companies in your area.

What is an insurance deductible, and how does it work?

What is a car insurance deductible? A car insurance deductible is an out-of-pocket cost you’ll be expected to cover before you receive a payout from your insurance company.

So what exactly does this mean? Let’s consider a scenario where you have a $1,000 deductible, and you’re in an accident that results in estimated damages of $3,500. In that case, you’ll be expected to cover the first $1,000 in damages while your insurance company pays out the remaining $2,500.

Your insurance company will list a deductible on your insurance policy. However, you’ll have input on the amount of the deductible, though you’ll need to work with your insurance company to understand the exact qualifications and requirements associated with how the deductible impacts your policy and rates.

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Do you have a single car insurance deductible or a different one for each type of coverage?

The type of claim (collision, comprehensive, etc.) determines the deductible amount when you file a claim. This varies by deductible and, sometimes, by state law. One example of this is the uninsured motorist coverage requirement in South Carolina, which comes with a $200 deductible according to state law.

The table below summarizes which coverage types usually require a deductible and lists average ranges for those deductibles.

Car Insurance Deductible Types and Average Amounts
Car Insurance Coverage TypeHas a DeductibleEstimated Deductible Range
Liability InsuranceNoN/A
Collision InsuranceYes$100 to $1,000
Comprehensive CoverageYes$100 to $1,000
Personal Injury Protection (PIP)Yes$100 to $1,000
Uninsured Motorist Bodily Injury CoverageNoN/A
Uninsured Motorist Property Damage CoverageYes$100 to $2,000
Medical Payments Coverage (MedPay)NoN/A
Mechanical Breakdown Insurance (MBI)Yes$250
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We’ll talk later — in more detail — about deductible amounts, how they can affect your rates, and factors to consider when setting your deductible. Remember that the numbers listed in our table are estimates based on current car insurance coverage information. The deductible limits offered by your insurance company will vary, as well as any qualifiers for specific amounts available to you.

Does your insurance deductible affect your insurance rates?

Your deductible can have a significant impact on your car insurance rates. A higher deductible can often mean lower rates because it shifts more of the risk to you. Essentially, car insurance companies perceive a higher deductible as an indicator of your financial responsibility and ownership over the cost of any covered damages, since you’re willing to take on a higher percentage of the cost.

This can be extrapolated to mean that you’ll choose to be a safer driver to reduce the chances that you’ll end up in a situation requiring payment of your deductible.

How do you select a deductible?

Selecting an appropriate deductible requires balancing a reduction of your insurance rates — by selecting a higher deductible — with selecting a deductible that you can afford, should you need to pay it. Deductibles typically range between $250 and $1,000 but can be as high as $2,500.

When are you required to pay your car insurance deductible?

When do you pay the deductible for car insurance? The short answer is whenever you file a claim for a covered incident. However, there may be exceptions, which we’ll discuss in the next section. In many cases, once the total amount of your payout has been identified, your insurance company will simply deduct your deductible amount from the total payout and then cut you a check.

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Can you avoid paying your car insurance deductible?

In most cases, you won’t be able to avoid paying your car insurance deductible. However, you can request that it be waived. If you think they will agree, you can ask your mechanic to waive the deductible in exchange for your hiring them to repair your vehicle.

Depending on state laws, certain claim types may also result in a waived deductible. One example of this is glass repair (specifically windshield repair).

What if you aren’t able to pay your car insurance deductible?

If you can’t pay your car insurance deductible, you don’t have many options. Generally, you won’t be able to file a claim because the deductible is requiried to receive a payout from your insurance company. If the damages are severe enough to require immediate repair, your best bet may be to take out a loan to cover the cost of your deductible.

Suppose that the estimated cost of repairs is lower than your deductible. In that case, it may make more sense to avoid filing a claim altogether and, instead, handle the cost of repairs yourself once you can afford it (since you’d be paying out of pocket either way).

Car Insurance Deductible: The Bottom Line

When you file a claim with your car insurance company, be prepared to pay an initial out-of-pocket fee to qualify for a payout for the remainder of the cost of repairs. This initial cost to you is referred to as your deductible. Some insurance companies require you to pay the amount before you receive a check, while others simply cut you a check, less your deductible amount.

Setting the appropriate deductible amount is essential to your budget in two ways. First, you’ll need to be sure to set a deductible you can afford, in case you need to pay it at some point. Second, adjusting your deductible amount can impact your insurance rates. In general, the higher your deductible, the lower your insurance rates will be (but again, keep your budget in mind when selecting a deductible).

Now that you know the quick facts on the meaning of insurance deductible, take a moment to enter your ZIP code into our rate comparison tool to obtain free quotes from top companies and begin saving today.

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Frequently Asked Questions: Car Insurance Deductibles

If you’re looking for additional information on car insurance deductibles, read through these frequently asked questions.

#1 – Will you still need to pay your deductible if it is higher than the total cost of repairs?

If you file a claim, you’ll have to pay the cost of repairs out of pocket since the total amount is lower than your deductible. With this in mind, if it makes more sense — based on whether filing a claim could negatively impact your insurance rates — you may choose not to file a claim. Instead, you can simply pay for the repairs without involving your insurance company, since you’ll be paying out of pocket either way.

#2 – If you aren’t at fault in an accident, will you still have to pay your car insurance deductible?

In most states, if you aren’t at fault in an accident, you won’t need to pay your deductible because the other driver’s insurance will cover the cost of damages. However, if you choose to file a claim with your insurance company, you must pay the deductible.

Additionally, state law can impact whose insurance is responsible after an accident, so be sure to work with your insurance company to understand how it works where you live.

#3 – What is the highest car insurance deductible you can get?

In most cases, you probably won’t see a car insurance deductible higher than $2,500, and you may not need a deductible that high. Work with your car insurance company to select a deductible amount that best fits your needs and budget, as the highest and lowest deductibles may not always be the best option.

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