Key Takeaways
Your Deductible Is What You Pay Before Insurance Covers the Rest
A car insurance deductible is the dollar amount you are responsible for when you file a claim under coverages like collision, comprehensive, uninsured motorist property damage, or personal injury protection. For example, if you have a $250 deductible and $2,000 in damage, you pay $250 and your insurer pays the remaining $1,750. You typically pay the deductible directly to the repair shop or it is subtracted from your settlement if the vehicle is totaled.
A Higher Deductible Lowers Your Premium, but Raises Your Out-of-Pocket Risk
Choosing a higher deductible reduces your monthly premium because you are agreeing to absorb more cost in the event of a claim. A lower deductible costs more per month but reduces what you owe at the time of a loss. The right choice depends on what you can comfortably afford to pay out of pocket after an accident and how that tradeoff affects your overall policy cost.
Your Deductible May Be Waived in Certain Situations
In some cases, you may not owe a deductible at all. Windshield glass repairs under comprehensive coverage are commonly waived, and some states offer additional coverage options that eliminate the deductible in specific scenarios. If the other driver is at fault and their insurer accepts liability, their policy may cover your damages directly with no deductible from you.
What is a car insurance deductible?
A car insurance deductible is the amount of money you pay toward an accident or claim before your coverage kicks in. There may be deductibles for coverages such as comprehensive, collision, uninsured motorist property damage, and personal injury protection.
How does an auto insurance deductible work?
Let's say you have collision coverage, with a $250 deductible, and are involved in a car accident that causes $2,000 of damage to your vehicle. If you file a covered claim with your insurance company, then you will pay the $250 deductible, and your insurance carrier will pay the remaining $1,750 towards your car repairs. Your deductible is typically paid directly to the repair facility or may be deducted from your settlement should your vehicle be declared a total loss.
With some exceptions, you will pay a deductible for each loss you file under your auto insurance policy.
How do I choose the car insurance deductible amount?
In most situations, you may choose the car insurance deductible amount for each coverage. You should consider several factors when making this decision.
First, consider the dollar amount you want to be responsible for paying. In most situations, you will be required to pay your deductible when you file a claim under your own policy — so choose an amount you're comfortable paying out of pocket.
Second, the deductible amount will impact your car insurance premium. If you choose a low deductible amount, then you'll likely be paying a higher insurance premium for the coverage. On the other hand, if you choose a high deductible amount, then you'll likely pay a lower insurance premium. You should compare and calculate how your deductible impacts your overall policy premium.
When do you pay the deductible for car insurance?
You pay a car insurance deductible when you file a claim under coverage that requires it, such as collision or comprehensive insurance. The deductible is typically paid directly to the repair shop or subtracted from the payout issued by your insurer. For example, if your car needs $3,000 worth of repairs after an accident and your deductible is $500, you would pay the repair shop $500, and your insurance would cover the remaining $2,500. In cases where your car is deemed a total loss, the deductible is subtracted from the settlement amount your insurer provides. This means if your car's value is determined to be $10,000 and your deductible is $1,000, you'd receive a $9,000 payout.
In some scenarios, you might not pay the deductible immediately. For instance, if you're filing a claim to repair damages and your insurer works directly with the repair shop, the deductible may be included in the repair bill, which you'll pay once the repairs are complete. Alternatively, if your claim involves reimbursement for out-of-pocket expenses, the deductible is subtracted before the payment is sent to you.
Can a car insurance deductible be waived?
In most situations, for coverages with a car insurance deductible, a deductible will apply - but there are some circumstances in which the deductible may be waived. For example, if you have comprehensive coverage and make a claim to repair windshield glass damage, then your deductible may be waived. Check with your insurance representative to verify what deductibles apply. In some states, you may purchase additional auto insurance coverage that will waive your deductible in some scenarios. Check your state reference page for more information.
Now that you know more about how car insruance deductibles work, get a free car insurance quote from GEICO today.
Do I owe a deductible if I hit someone else's car?
Whether you owe a deductible if you hit someone else's car depends on the type of insurance coverage involved. If you file a claim under your collision coverage to repair your own vehicle, you'll typically need to pay the deductible listed in your policy. However, if the other driver is at fault and their insurance provider accepts liability, then their policy may cover your damages directly without you paying a deductible. If you are found at fault for causing damage to someone else's vehicle or property, your liability insurance will typically cover their costs with no deductible applied. Always check your specific policy and state laws to confirm how coverage is specifically applied for you.
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