What is a car insurance deductible and how does it work?
- Your deductible is the amount that you pay before your insurance begins covering repairs
- High and low deductibles will affect how much you pay each month
- It would be beneficial to discuss multiple deductible options with your insurer to determine what is best for you
When considering a car insurance deductible, you should know how it will affect your policy’s cost. Many of the best car insurance companies are willing to provide you with the option of raising or lowering your deductible. Increasing your deductible can help reduce your monthly rates, but you’ll have to pay more when you get into an accident. Conversely, a lower deductible means you’ll pay less when your vehicle becomes involved in a collision but more each month.
If you’re considering quotes for a car insurance deductible, enter your ZIP code into our free quote tool to discover what you could pay today.
What is a deductible in car insurance?
What does a deductible mean in regard to car insurance? According to the Insurance Information Institute, the insurance deductible is what you will have to pay before your insurance company begins covering the repairs. So, if you’ve been in an accident and need your insurance company to pay for repairs, you’ll first need to pay your deductible.
Once you pay your deductible, the insurance company will begin covering your repairs. However, there are some instances where you won’t need to pay the deductible. For example, if your car is declared a total loss, your insurance company may remove the deductible from the payout.
Below are instances when you won’t pay an insurance deductible:
- You don’t want to repair the car
- The repairs are less than the deductible
- The repair cost is only slightly more than the deductible
If your car is older and not worth repairing, you can avoid filing a claim. Not filing a claim will prevent your rates from increasing as well. Sometimes, it helps to compare the repair cost for your vehicle to the amount of the deductible. If the cost of repairs is similar to the amount of the deductible, or slightly above it, you should rethink filing a claim.
How does a car insurance deductible work?
When you file a claim, your insurer will initially want you to evaluate the level of damage to your vehicle. Once your insurance company is aware of the repair cost, you’ll have to pay your deductible before it begins to pay for the repairs. If the repairs cost less than your deductible, you’ll have to pay the total amount of the repairs.
When you file a car insurance claim, you should know how it will affect your policy. Anytime you file a car insurance claim, you’ll likely have to pay higher monthly rates. This is why it’s essential to consider the repair cost and potential risk of increased rates before you file a claim. If the repairs are more than you can afford, you should file an insurance claim, as the rate increase over time will likely be less expensive than the repairs.
When do you pay the deductible for car insurance?
Once you know the repair cost for your car, your insurance company will ask you to pay the deductible. Once you have paid it, your insurance company will cover the rest of your repairs. In cases where your deductible is higher than the repair cost, you might skip filing a claim and pay for the repairs yourself. This will keep your rates from increasing while still ensuring that your car is repaired.
What are the types of car insurance deductibles?
Your deductible may depend on your type of car insurance coverage, with some types of coverage having a higher deductible than others. Some car insurance types don’t require a deductible at all, but you’ll likely have to pay more out of pocket each month to cover the additional value. It’s crucial to balance these factors so you don’t end up with a policy that costs more than you can afford before or after an accident.
The car insurance coverage types that may affect your deductible include the following:
- Collision – This policy covers your vehicle damage and medical bills after you get into an accident with another vehicle. It often has a deductible of approximately $300 a month.
- Comprehensive – This protects your vehicle against vandalism, theft, severe weather, and fallen debris. Because this coverage is optional, the deductible you pay may vary between insurers.
- Underinsured – This coverage helps when you’re struck by a vehicle with no insurance and have a deductible sitting between $100 and $300.
Your car insurance deductible will largely depend on your type of coverage, as well as the value of the policy. For example, a collision policy that covers up to $5,000 in damages will likely have a lower collision deductible than a policy that covers up to $10,000 in damages. When considering your deductible with your rates, you can raise your deductible to ensure affordable monthly payments.
Is there car insurance that doesn’t have a deductible?
Some car insurance policies don’t require you to pay a car insurance premium at all when your vehicle gets damaged. One example is zero-deductible car insurance from Allstate, which admits you will likely have to pay more each month.
What is the average cost for car insurance deductibles?
Your car insurance deductible amount will likely depend on your policy and the amount of coverage you have. Some car insurance policies will let you adjust your deductible, therefore ensuring that you’ll have a better chance of getting lower car insurance rates. Because each insurer varies, it’s difficult to pinpoint the average deductible in the United States, but it is often available in increments like $250, $500, $1,000, $1,500, and above.
What should I consider when buying car insurance?
You should carefully consider enrolling in a new car insurance policy, as you’ll likely have that coverage for the length of your car’s life unless you decide to switch. Of course, your insurance company will attempt to sign you as soon as possible, but you should first ensure that the policy is something that you’re able to live with.
These are some aspects to consider when searching for car insurance:
- The value of your vehicle
- Out-of-pocket costs after an accident
- The extent of the coverage
- How much you can afford each month
If you consider a variety of factors in selecting car insurance, such as the cost and what’s covered, you’ll be able to obtain more affordable rates while still getting the best coverage for your vehicle.
Car Insurance Deductible: The Bottom Line
When considering your car insurance deductible, you should be aware of the cost you’ll have to pay after an accident. If you’re unable to pay your deductible when the time comes, your insurance company won’t pay for the additional cost. However, you should also be aware that the lower your car insurance deductible, the higher your monthly coverage fee. Therefore, raising your deductible can be a great way to save on your monthly car insurance rates.
If you’re looking for affordable car insurance deductibles, enter your ZIP code into our free quote tool to discover what you could pay today.