Everything You Need to Know about Car Insurance Deductibles

When it comes to car insurance, your deductible is one of the most important components of your policy.

And, guess what? You have control over it.

A deductible is an amount you have to pay out-of-pocket before your insurance coverage kicks in…and it can be different for everyone. So, how do you know what the right deductible is for you?

In this article, we’ll help you understand what deductibles are, how they work, and what to consider when choosing your auto insurance deductible.

What Is an Auto Insurance Deductible?

An auto insurance deductible is the amount of money you will have to pay out of your own pocket before your insurance provider steps in if you have a car accident.

For example, if your deductible is $500 and you get into an accident that causes $3,000 worth of damage to your car, you would be responsible for the first $500, and your insurance provider would pay the remaining $2,500.

Your deductible will generally apply per accident. So, if you need to open multiple insurance claims during your policy period, you will likely need to pay a deductible for each claim.

Car Insurance Deductibles by Type of Insurance

There are different types of coverage provided by your car insurance, and each one may have its own deductible amount. Let's break down the different types of deductibles and what they might mean for you.

Does Liability Insurance Have a Deductible?

No, liability insurance does not require a deductible.

Liability coverage is triggered when you've been determined at fault in an accident where someone is injured and/or their property is damaged. In this situation, your liability coverage will cover the cost incurred by the injured individual, and there is no deductible required.

Liability insurance is a core component of most auto insurance policies and it is required by almost every state.

Does Collision Insurance Have a Deductible?

Collision insurance almost always requires a deductible.

You select your collision deductible amount when your policy is issued. In the simplest terms, collision insurance is designed to protect you if you're ever in an accident. If your vehicle is damaged in an accident, you will pay your deductible, and your insurance provider will cover the remaining expenses to repair or replace your vehicle.

Collision coverage is usually required if you have a loan or lease your vehicle. Deductible amounts will vary from one insurance carrier to the next, but common deductibles are $250, $500, & $1,000.

So, when should you file a collision coverage claim? You can file a collision coverage claim whenever you hit another vehicle, building, utility pole, or object. When you’re in a covered collision incident, your collision insurance will help pay for the cost of repairs. You will pay your deductible, and your insurance company will pay the rest.

However, when another driver is at-fault and hits your vehicle, things will look a little different.

In most cases, you will not have to pay any deductible when another driver hits you. As long as the at-fault driver carries sufficient insurance, their liability coverage should cover the cost of your repairs.

Does Uninsured and Underinsured Motorist Insurance Have a Deductible?

In the event that the at-fault driver is uninsured or underinsured, your Uninsured Motorist (UIM) coverage should fill that gap.

There are two primary Uninsured Motorist coverage types—one covering bodily injury (UMBI) and the other covering property damage (UMPD). Which claim you file may dictate whether or not a deductible is required.

Uninsured Motorist Coverage is a helpful component of your auto insurance policy that helps pay for your expenses when an at-fault driver doesn’t have adequate insurance. Say your vehicle is hit by another vehicle while you’re driving and the other driver doesn’t have insurance, or they flee the scene entirely. Your UMPD coverage would help pay for the damages to your vehicle. Many states require driver’s carry some form of UIM coverage, while others require insurance companies to offer UIM coverage and drivers can choose to reject it.

Uninsured Motorist Bodily Injury

If you’re involved in an injury accident where the at-fault driver does not carry adequate insurance, your Uninsured Motorist Bodily Injury (UMBI) coverage can help cover your medical treatments, pain and suffering, lost wages, and funeral expenses (in the unfortunate event of a fatality). This coverage does not typically require a deductible.

Uninsured Motorist Property Damage

Uninsured Motorist Property Damage (UMPD) coverage is triggered by the same situation as UMBI—an at-fault driver does not have adequate insurance. This coverage, however, applies to property damage to your vehicle, instead of personal injury. If your vehicle is damaged you can file a UMPD claim to help get your vehicle repaired. This coverage generally does require a deductible.

Does Comprehensive Insurance Have a Deductible?

Yes, comprehensive insurance, commonly referred to as "other than collision" or "OTC" coverage, typically does require a deductible.

Comprehensive insurance protects you against various types of losses except for collisions with vehicles or objects.

Wondering when you should file a comprehensive claim? You can take a deep dive into comprehensive coverage here, but let's look at a few scenarios:

Theft of the covered vehicle
Vandalism
A riot or other civil disturbance that leads to damage to your vehicle
Falling objects, such as hail or storm debris

Comprehensive coverage deductibles will vary from one insurance carrier to the next, but common deductibles are $250, $500, & $1,000.

No states require drivers to carry comprehensive coverage, but lenders will often require it if you finance or lease your vehicle.

Does Personal Injury Protection Insurance Have a Deductible?

Personal injury protection (PIP) is insurance coverage that helps pay for your costs resulting from an injury in a car accident. Whether or not this coverage requires a deductible can vary depending on the state.

What Happens If the Deductible Costs More than the Repairs?

If your deductible is higher than the cost of repairs to your car, you will be responsible for covering the entire expense yourself. For example, if your deductible is $500 and it costs $300 to fix a broken taillight after you backed into a fencepost, you would be responsible for paying the $300 in repairs out of pocket.

The Difference between a High or Low Deductible

When you're shopping for insurance, you'll be met with numerous coverage options. Some components of an auto insurance policy are required, some are optional, and others have variable factors, like the particular coverage amount or the deductible you choose. These coverage options and other rating factors will determine the premium you pay for your auto insurance coverage.

The deductibles you select can have a signiﬁcant impact on your insurance rates, so when you are deciding which deductible to choose, it’s important to consider the plan that will work best for your unique needs.

Choosing a high deductible means you have to pay more money when something happens to your car, but your monthly payments will typically be lower.

Selecting a low deductible means you pay less money when something happens to your car, but your monthly payments will typically be higher.

When Might Someone Consider a High Deductible?

While you'll always want to consider your personal situation and preferences, individuals who choose higher deductibles often value a lower monthly premium may prefer to handle small claims on their own or may have a lower-valued vehicle that they would rather replace in the event of an accident.

When Might Someone Consider a Low Deductible Plan?

Because lower deductibles generally result in higher monthly premiums, they are commonly chosen by individuals that don't want to worry about coming up with a sizable sum of money on short notice but are comfortable paying more for their insurance on a monthly basis.

Things to Consider When Selecting a Deductible

To select the right deductible for you, here are a few things that will be helpful to consider:

What's your tolerance for a sudden expense? If you were to select a $1,000 deductible, would it be challenging to come up with the funds in the event of an accident?

What does your claims history look like? Everybody is different. Some people prefer to handle minor repairs on their own and only turn to their insurance in more costly situations, while others are more inclined to file a claim regardless of the size. Looking back on your claims history can help you select an appropriate deductible today.
What are you driving? The lower the value of a vehicle, the more likely an accident will result in a total loss. Imagine you drive a vehicle worth $1,750, and you choose a $1,000 deductible. Unfortunately, you hit a patch of black ice that sends you into an icy snowbank, totaling your vehicle. In this scenario, you would pay your $1,000 deductible and would receive $750 from your insurance company. People with lower value vehicles may opt for a lower deductible to maximize their payout in the event of a total loss. Or, they might decline these coverages altogether if it doesn’t make financial sense when considering the value of their vehicle.

When Are You Responsible for Paying Your Deductible?

When filing a car insurance claim, there will be certain situations that will require you to pay a deductible and others that won't.

Situations When You Are Required to Pay a Deductible

Let's look at a few situations (a non-exhaustive list, of course) where you'd likely need to pay a deductible:

When filing a collision claim after a single-car collision;

When filing a collision claim after you are at fault in a multi-car collision;
When filing a comprehensive claim after an event other than collisions, such as theft, fire, or hail;

When You Are Not Required to Pay a Deductible

When you’re faced with an unexpected and unpleasant event, not having to pay a deductible can feel like a huge relief. Here are a few situations where you will typically not need to pay an auto insurance deductible:

When you are not at fault in a collision—the at-fault driver's liability coverage will usually cover your repairs without a deductible;
When you are at fault for an accident, and only the other driver's vehicle is damaged—your liability coverage will usually cover the other driver's repairs without a deductible to either party;
When you have a $0 deductible on a coverage type—some insurance carriers may offer the option to eliminate your deductible as an option for certain coverages. If you selected a $0 deductible auto insurance option, no deductible would be required when submitting a claim under that coverage type.

Get Car Insurance Coverage Through Clearcover

So now that you’ve got the lowdown on car insurance deductibles, how to choose them, and what options you have, how do you feel about yours?

At Clearcover, we're all about making insurance fast, simple, and easy. Get a free, no-obligation quote in minutes and explore your coverage and deductible options with Clearcover. Take control of your coverage and see what you can save by switching to Clearcover (any time, all online).