Auto Insurance Deductibles

Car insurance deductibles may seem complicated, but auto insurance deductibles and how they work isn't hard to understand. You don't even need some sort of 'auto insurance deductibles for dummies' guide, you just need to understand a few simple ideas. First, the average car insurance deductible is $500. That means if you need repairs, you will have to pay $500 (based on the average auto insurance deductible) toward the cost of repairs before your auto insurance company will pay the rest of the cost up to your coverage limit. What happens if you can't pay your deductible? Most often, the mechanic will cover the deductible. You will have to repay the mechanic for your auto insurance deductible before you can retake possession of your vehicle. Find out more about automobile deductibles and how they impact your car insurance rates below.

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Chris Tepedino is a feature writer that has written extensively about auto insurance for numerous websites. He has a college degree in communication from the University of Tennessee and has experience reporting, researching investigative pieces, and crafting detailed, data-driven features. His works have been featured on CB Blog Nation, Flow Words, Healing Law, WIBW Kansas, and Cinncinati.com. ...

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Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states. After several years she expanded her insurance expertise, earning her license in Health and AD&D insurance as well. She has worked for small health in...

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Reviewed by Rachael Brennan
Licensed Insurance Agent

UPDATED: Jul 19, 2021

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What is an automobile insurance deductible? Well, in short, your auto insurance deductible is the amount of money you pay upfront (determined in advance by you, your insurance provider, and your policy) before your insurance company will pay out on certain claims. Usually, you have to pay a deductible if you file a claim which is covered by the collision or comprehensive auto insurance coverage on your policy.

Here’s an example of how your deductible works: let’s say that an unfortunate car accident occurs and the damages to your car total $2,500. If your auto insurance deductible is $1,000, you will be responsible for paying a thousand dollars before your auto insurance covers the remaining $1,500.

There is an inverse relationship between how high your deductible is, and how high your monthly premiums are. We’ll explore that relationship below, and also help you understand how altering your deductible can help you improve your overall finances. If your rates are too high even after you change your deductible, you can compare rates with our FREE quote tool above.

How much is my automobile insurance deductible? How much is enough for my personal needs?

When determining what kind of automobile insurance deductible to choose, it is important to factor into your equations how much deductible you can afford. As we mentioned earlier, there is an opposing relationship between your monthly premium and your insurance deductible.

A low deductible means that you will have to pay very little to your insurance company in the event of a serious accident; however, it will also make your monthly premiums cost more. Setting your deductible to a high amount can drastically lower your monthly premium; but if the worst happens to your vehicle, you will have to foot more of the bill.

Hypothetically, a safe driver who believes that they are unlikely to get into a serious accident can benefit the most from raising their deductible. Not only will doing so lower their monthly payments, but if they never have to file a Comprehensive or Collision claim, then they will never have to worry about paying that higher deductible anyway.

But it is understandable if you’d prefer to maintain a lower deductible just in case. There are still discounts and strategies to lower your overall monthly insurance bill, even with a low deductible. Most offer a discount for clean driving histories, even if you carry a low deductible. There are also discounts for driving fewer miles, having an anti-theft device on your vehicle, bundling your policy with other household members, and more.

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Risk Management

It all comes down to risk in the end. When trying to make these decisions, you’ll want to consider a few factors. How is your driving record? How secure is your neighborhood? How do people drive on your daily commute?

If your driving record is pristine and you live in a good neighborhood, then you’re potentially throwing away money each month by maintaining a low automobile insurance deductible and paying higher premiums as a result. If you are new to driving, or live in a metropolitan area, then having a low deductible might be a blessing. It is all a matter of your personal needs.

Car Insurance: High vs. Low DeductibleLegend: $500 Deductible $250 Deductible CaliforniaTexasIllinoisFloridaNew York 255075100125150175200225$78$106$117$135$64$76$161$226$140$154

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