What is a car insurance deductible?

A car insurance deductible is the amount you pay when you make a claim for certain types of coverage. After you pay the deductible, the insurer helps cover remaining car repair costs and medical bills up to your policy limits. Learn more about how auto deductibles work and how to set yours.

Key findings

  • Your auto policy collision and comprehensive coverage require a deductible.
  • You pay a car insurance deductible when you file certain types of claims with your car insurance provider.
  • Liability coverage does not require a deductible.
  • You can often choose your deductible amount, and higher deductibles result in lower premiums.

How does a car insurance deductible work?

When you sign up for an auto insurance policy, your insurer asks you to select a deductible amount for certain types of insurance coverage, such as collision coverage. The standard deductible is $500, but options range from $0 to $2,000. If you file a claim that requires a deductible, you must pay the deductible amount out of pocket before your insurer will cover the full cost of the damage.

If fault in an accident is disputed, your insurer may try to recover payment from the driver responsible for the damage to your car, including any deductible you paid. If you are partially at fault for an accident, only a portion can be recovered. If your insurer successfully recovers all claims costs and you are not at fault, the excess you paid is refunded.

Health insurance deductibles require you to spend a certain amount per year before your insurer covers all costs. Auto insurance deductibles work differently because they are event-based. So if you have multiple covered claims during the year, you will pay a deductible each time.

An example of a car insurance deductible

Let’s say you have a $500 deductible on your collision insurance and you rear-end another vehicle at a stop light. After exchanging information with the other driver, you call your insurance company to report the accident and file a claim.

Soon after, the insurer approves the claim and asks you to pay the deductible. You pay $500 and your repairs total $3,500. Your insurer will then cover the remaining $3,000.

But if you didn’t have collision coverage, the accident won’t be a covered claim. Your insurer would say you have to pay the entire $3,500 repair cost out of pocket. If you were not at fault for the accident, the other driver’s insurance will pay for your repairs and you will not pay the deductible.

Types of auto insurance deductibles

Auto insurance deductibles are usually due when you file a claim under one of the following types of coverage.

Collision coverage

Collision coverage helps pay for repairs to your vehicle if you hit another car or a stationary object like a guardrail or pole. Standard collision coverage deductible amounts range from $200 to $1,000, according to the California Department of Insurance.

Full coverage

Comprehensive coverage helps pay for repairs to a vehicle if it is damaged by a covered peril such as hail, theft or burglary. Full coverage deductibles range from $50 to $1,000, according to the National Association of Insurance Commissioners.

Personal Injury Protection (PIP)

Personal Injury Protection (PIP) helps cover lost wages and medical expenses for you and your passengers, no matter who is at fault for the accident. This coverage may be required in no-fault situations. Unlike other types of coverage, you may also be responsible for some copayments for medical expenses with PIP, even after you’ve paid the deductible.

Uninsured motorist coverage

Uninsured motorist coverage helps pay for vehicle repairs if an uninsured driver hits you. This coverage may have a lower deductible than collision insurance. In some states, the law limits the deductible you can be charged, such as $150 to $500.

Imagine totaling a vehicle but still owing the car loan or lease. The insurer’s settlement does not cover the full amount owed to the lender or car leasing company. GAP insurance helps pay the difference. Depending on your GAP insurance policy, this may or may not also help pay the required deductibles.

Non-deductible situations

Here are situations where you most likely won’t pay your auto insurance deductible:

  • If the car accident is the fault of the other driver: Their liability coverage covers your damages up to their coverage limits.
  • If you are found to be at fault for the damages in an accident: Your liability coverage will cover their damages up to your coverage limits.
  • An uninsured or uninsured driver is guilty of: Some states or insurers may not require you to pay the deductible for certain personal injuries under your uninsured/underinsured motorist (UI/UIM) coverage.
  • Glass repair or replacement: Some insurers waive the deductible if you repair rather than replace the glass. In some states, insurers must provide zero-deductible windshield coverage if you have comprehensive coverage.
  • You have a zero-deductible, no-deductible, or “reduced deductible” endorsement on your policy: You can get a $0 deductible for some coverages or with some insurers.

How to choose the right deductible amount

The correct deductible amount will depend on your budget, the likelihood that you will need to file claims and your tolerance for risk.


If you need to lower your insurance premium, a higher deductible can help. You’ll still want to make sure you can afford the deductible in the event of an accident or even theft of your car. Remember, your total annual costs depend on your premium and the deductibles you pay out of pocket.

In some states, your insurer may charge you a higher deductible if you have a history of claims.


Consider the likelihood of making claims for everyone on your policy. Review recent years and note all claims filed. Also, consider factors such as the driving experience of protected drivers, the car theft rate where you park vehicles, and weather damage.

You may choose a higher premium if the risk of making a claim is low. For example, if you haven’t filed a claim in years, you’re not at increased risk of theft or vandalism, and you don’t often drive in heavy traffic. If you don’t file a claim, you’ll save on your overall car insurance costs thanks to the lower premium. However, those who are more likely to file claims will likely benefit from the lower deductible if they do have to file a claim.

Risk tolerance

The decision will also depend on the level of risk you are willing to bear. If you’d rather be safe than sorry, you might prefer a low deductible and a higher premium. If you don’t mind hoping nothing happens, a higher deductible may be right for you.

If your car is worth less than $1,000, you can forgo collision and comprehensive auto coverage, since any covered claim won’t be much more than the deductible and premium.

When do you pay your car insurance deductible?

You pay your auto insurance deductible when the claim you file is approved. Payment is required before your insurer will cover any associated damage costs.

What is a good deductible for car insurance?

In some states, insurers must first offer $500 to $750 in collision deductible and/or comprehensive coverage, which are standard rates. However, many insurers offer lower deductibles in exchange for higher premiums or different deductibles on optional coverages. Doubling your deductible from $500 to $1,000 can save up to 20 percent on your premium payments, according to the Texas Department of Insurance.

Do you have to pay a deductible if you are not at fault?

In most cases, you do not pay a deductible if you were not at fault for the accident. The other person’s property damage liability coverage must pay for your damages. However, if the other driver is uninsured or underinsured, you will likely submit the claim to your insurer, which may require a deductible. You can also pay the deductible to fix your car if fault for the accident is disputed or if you are partially at fault.

What happens if you can’t pay your deductible?

If you can’t pay your deductible, your insurer won’t cover the costs associated with your claim. As a result, you will be fully responsible for any repairs or medical services you require. In this situation, it may make financial sense to take out a personal loan or use a credit card to finance the deductible and cover most of the cost.

What if your car insurance deductible costs more than your repairs?

If your auto insurance deductible costs more than your repairs, there’s no point in filing a claim. Also, remember that most claims can result in higher auto insurance premiums when it comes time to renew coverage. It would be best to pay the costs out of pocket and leave insurance out of the equation.

The bottom row

Deductibles are fundamental to any auto insurance policy. It’s important to set your deductible carefully, as it can significantly affect your total expenses for the year. Shop around and compare quotes as deductible and premium amounts vary from one insurer to another. If you’re not sure where to start, you can check out this list of the best car insurance companies for 2023.

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