Car insurance doesn’t cover every claim 100%. You’ll have to pay your fair share of out-of-pocket expenses, including the deductible. This is the amount you’re responsible for before insurance covers the rest.
If you’re wondering how a car insurance deductible works, you’re in the right place. Read on for answers and helpful tips on how to choose a deductible amount for car insurance, when to pay it, how to avoid paying car insurance deductibles and more.
- A deductible is the amount you have to pay out of pocket before insurance coverage kicks in.
- You should pay a lower insurance policy premium if you raise your deductible.
- Michigan, Washington, D.C., North Dakota, Oklahoma, California, Delaware, Montana, Wisconsin, South Dakota and Wyoming are among the states where you can save the most by raising your deductible amount from $250 to $1,000.
What is a car insurance deductible?
A car insurance deductible is the initial sum you have to pay out-of-pocket before your insurance coverage kicks in and begins to pay out a claim due to an accident or damage to your vehicle. You are responsible for your deductible, and your carrier typically covers the rest.
“For instance, let’s say your car sustains damage in an accident and you seek repairs. The repair cost is quoted at $1,500. If you have a $500 deductible in place, you would pay the first $500 yourself, and then the insurance company would cover the remaining $1,000,” says Deece Catanzaro, an independent insurance agent with Wallace & Turner Insurance in Springfield, Ohio. “Deductibles help distribute risk between the insured individual and the insurance provider and contribute to keeping insurance premiums more affordable.”
Typically you can choose a deductible of $250, $500 or $1,000, but amounts can go as high as $2,500.
How does a car insurance deductible work?
The portions of a policy that carry a deductible are two optional coverages that cover physical damages: comprehensive and collision. Combined, collision coverage and comprehensive insurance are often called “full coverage.”
Here’s how they break down:
- Collision coverage covers your own car damages after your vehicle collides with something — another car, a fence, a wall, a tree or anything except an animal.
- Comprehensive coverage covers everything else — theft, vandalism, flood damage, a falling tree or an animal strike.
These two coverages payout+ up to the actual cash value of your car, minus your deductible.
The costs of comprehensive and collision are determined by the value of your car and the likelihood that the insurance company will have to pay out that amount. There are only three ways to save money on the cost of that coverage:
- Drop collision and comprehensive if you own your car outright and it’s not worth much or you can afford to replace it.
- Shop around with different carriers. Rates can differ by hundreds of dollars.
- Increase your deductible.
How to choose a deductible amount for car insurance
You choose your deductible when you first purchase auto insurance, although your deductible amount can be changed at any time your policy is active— although not retroactively following a recent covered claim.
“When choosing a deductible, you should consider your financial situation and driving habits,” says Elin Nozewski, vice president of communications and licensed insurance agent with Jerry, a car insurance savings app based in Palo Alto, California. “If you can afford a higher out-of-pocket cost in the event of a claim and want to lower your premium, a higher deductible might be suitable. Conversely, if you prefer lower out-of-pocket expenses at the time of a claim, opt for a lower deductible.”
You should also consider the value of your vehicle before deciding on a deductible.
“It’s imprudent to have a high deductible – such as $1,000 – on a car valued at only $3,000, as you would end up paying out a significant portion of the car’s worth in the event of a loss,” Catanzaro says.
Other factors can influence your choice here, too.
“If you have a history of tickets and accidents, having a higher deductible might help you manage costs,” says Rajni Kapur, president of All Solutions Insurance in Moreno Valley, California. “Note that if you have a car that is being financed, finance companies might not let you have a deductible higher than a certain amount. And if you rent a car, the rental company might have a limit on the highest deductible amount they accept.”
Is it a good idea to increase your car insurance deductible?
Again, upping your deductible can be a smart idea if you are seeking to lower your monthly premium.
“Typically, raising your deductible can reduce your premium,” Nozewski says. “However, ensure that you have the financial means to cover the higher deductible in case of a claim.”Kapur agrees.
“Carrying a higher deductible is always a strong practice as it makes you more responsible and discourages you from filing small claims. Filing small claims could be counterproductive, eventually leading to higher premiums,” she says.
How much can you save on auto insurance by increasing your deductible?
According to Nozewski, increasing your deductible from $500 to $1,000 may lower your car insurance rate by 10%, although the exact savings will depend on various factors – including your carrier, location and driving record.
“In my experience, raising it from $500 to $1,000 can result in an average savings of approximately $188 per year on comprehensive and collision coverage collectively,” Catanzaro says.
| Full coverage car insurance cost with $250 deductible | $2,063 |
| Full coverage car insurance cost with a $500 deductible | $1,895 |
| $ Savings | $168 |
| % Savings | 9% |
| Full coverage car insurance cost with $500 deductible | $1,895 |
| Full coverage car insurance cost with a $1,000 deductible | $1,707 |
| $ Savings | $188 |
| % Savings | 10% |
| Full coverage car insurance cost with $250 deductible | $2,063 |
| Full coverage car insurance cost with a $1,000 deductible | $1,707 |
| $ Savings | $356 |
| % Savings | 17% |
Why raising deductibles saves you money
Unlike liability coverage, which doesn’t have a deductible, collision and comprehensive pay only the amount that exceeds the deductible. The higher the deductible, the less risk the insurer takes and the lower the premium.
Raise your car insurance deductible to lower your rates: Savings by state
Below are the average rates in each state for three deductible levels. All samples include liability insurance limits of $100,000 for bodily injury per person, $300,000 for body injury per accident and $100,000 for property damage. Enter your state in the search field to get savings for your location.
| State | Full coverage car insurance cost with $250 deductible | Full coverage car insurance cost with $500 deductible | Savings by increasing deductible from $250 to $500 | % Savings by increasing deductible from $250 to $500 | Full coverage car insurance cost with $1000 deductible | Savings by increasing deductible from $500 to $1,000 | % Savings by increasing deductible from $500 to $1,000 | Savings by increasing deductible from $250 to $1,000 | % Savings by increasing deductible from $250 to $1,000 |
|---|---|---|---|---|---|---|---|---|---|
| Alaska | $1,847 | $1,676 | $171 | 9% | $1,481 | $195 | 12% | $366 | 20% |
| Alabama | $1,991 | $1,860 | $103 | 5% | $1,700 | $160 | 9% | $291 | 15% |
| Arkansas | $2,164 | $1,957 | $152 | 7% | $1,747 | $210 | 11% | $417 | 19% |
| Arizona | $1,956 | $1,812 | $122 | 6% | $1,644 | $168 | 9% | $312 | 16% |
| California | $2,584 | $2,416 | $142 | 5% | $2,147 | $269 | 11% | $437 | 17% |
| Colorado | $2,556 | $2,337 | $192 | 8% | $2,125 | $212 | 9% | $431 | 17% |
| Connecticut | $1,852 | $1,725 | $102 | 6% | $1,589 | $136 | 8% | $263 | 14% |
| Washington, D.C. | $2,334 | $2,157 | $154 | 7% | $1,858 | $299 | 14% | $476 | 20% |
| Delaware | $2,207 | $2,063 | $114 | 5% | $1,875 | $188 | 9% | $332 | 15% |
| Florida | $2,824 | $2,694 | $144 | 5% | $2,579 | $115 | 4% | $245 | 9% |
| Georgia | $2,127 | $1,970 | $121 | 6% | $1,815 | $155 | 8% | $312 | 15% |
| Hawaii | $1,658 | $1,517 | $119 | 7% | $1,351 | $166 | 11% | $306 | 18% |
| Iowa | $1,836 | $1,630 | $146 | 8% | $1,406 | $224 | 14% | $430 | 23% |
| Idaho | $1,583 | $1,428 | $104 | 7% | $1,276 | $152 | 11% | $307 | 19% |
| Illinois | $1,694 | $1,532 | $138 | 8% | $1,353 | $179 | 12% | $341 | 20% |
| Indiana | $1,665 | $1,515 | $120 | 7% | $1,340 | $175 | 12% | $324 | 19% |
| Kansas | $2,116 | $1,900 | $162 | 8% | $1,654 | $246 | 13% | $462 | 22% |
| Kentucky | $2,390 | $2,228 | $127 | 5% | $2,039 | $189 | 8% | $352 | 15% |
| Louisiana | $3,140 | $2,883 | $267 | 9% | $2,588 | $295 | 10% | $552 | 18% |
| Massachusetts | $1,858 | $1,726 | $132 | 7% | $1,477 | $249 | 14% | $381 | 21% |
| Maryland | $1,879 | $1,746 | $147 | 8% | $1,581 | $165 | 9% | $299 | 16% |
| Maine | $1,308 | $1,175 | $113 | 9% | $1,043 | $132 | 11% | $265 | 20% |
| Michigan | $2,592 | $2,352 | $413 | 16% | $2,091 | $261 | 11% | $501 | 19% |
| Minnesota | $2,107 | $1,911 | $165 | 8% | $1,708 | $203 | 11% | $399 | 19% |
| Missouri | $2,223 | $1,982 | $259 | 12% | $1,732 | $250 | 13% | $490 | 22% |
| Mississippi | $2,156 | $2,008 | $99 | 5% | $1,837 | $171 | 8% | $319 | 15% |
| Montana | $2,482 | $2,193 | $235 | 9% | $1,882 | $311 | 14% | $601 | 24% |
| North Carolina | $1,840 | $1,741 | $78 | 4% | $1,620 | $121 | 7% | $220 | 12% |
| North Dakota | $1,881 | $1,665 | $150 | 8% | $1,424 | $241 | 14% | $457 | 24% |
| Nebraska | $2,189 | $1,902 | $271 | 12% | $1,615 | $287 | 15% | $573 | 26% |
| New Hampshire | $1,410 | $1,265 | $106 | 8% | $1,142 | $123 | 10% | $269 | 19% |
| New Jersey | $1,986 | $1,902 | $98 | 5% | $1,793 | $109 | 6% | $193 | 10% |
| New Mexico | $2,250 | $2,049 | $166 | 7% | $1,840 | $209 | 10% | $410 | 18% |
| Nevada | $2,173 | $2,060 | $126 | 6% | $1,942 | $118 | 6% | $231 | 11% |
| New York | $2,015 | $1,870 | $142 | 7% | $1,703 | $167 | 9% | $312 | 16% |
| Ohio | $1,558 | $1,417 | $106 | 7% | $1,239 | $178 | 13% | $319 | 20% |
| Oklahoma | $2,422 | $2,138 | $246 | 10% | $1,883 | $255 | 12% | $538 | 22% |
| Oregon | $1,799 | $1,678 | $103 | 6% | $1,559 | $119 | 7% | $239 | 13% |
| Pennsylvania | $2,061 | $1,872 | $126 | 6% | $1,634 | $238 | 13% | $427 | 21% |
| Rhode Island | $2,220 | $2,061 | $130 | 6% | $1,864 | $197 | 10% | $357 | 16% |
| South Carolina | $2,145 | $2,009 | $113 | 5% | $1,843 | $166 | 8% | $302 | 14% |
| South Dakota | $2,618 | $2,280 | $226 | 9% | $1,856 | $424 | 19% | $762 | 29% |
| Tennessee | $1,828 | $1,677 | $109 | 6% | $1,491 | $186 | 11% | $337 | 18% |
| Texas | $2,251 | $2,043 | $189 | 8% | $1,835 | $208 | 10% | $417 | 19% |
| Utah | $2,013 | $1,825 | $187 | 9% | $1,647 | $178 | 10% | $365 | 18% |
| Virginia | $1,630 | $1,469 | $124 | 8% | $1,321 | $148 | 10% | $309 | 19% |
| Vermont | $1,450 | $1,319 | $99 | 7% | $1,179 | $140 | 11% | $271 | 19% |
| Washington | $1,719 | $1,608 | $90 | 5% | $1,494 | $114 | 7% | $225 | 13% |
| Wisconsin | $1,858 | $1,664 | $176 | 9% | $1,445 | $219 | 13% | $413 | 22% |
| West Virginia | $2,228 | $2,005 | $154 | 7% | $1,756 | $249 | 12% | $472 | 21% |
| Wyoming | $2,006 | $1,758 | $237 | 12% | $1,430 | $328 | 19% | $577 | 29% |
Frequently asked questions
Does raising your car insurance deductible save you money?
Yes, in most cases increasing your car insurance deductible will lower your premium cost, often by 10% to 20%, according to Elin Nozewski with Jerry, a car insurance savings app. However, your specific savings will be based on your insurer, driving record, location and other factors.
How to avoid paying your car insurance deductible
The easiest way to bypass paying an insurance deductible is to drive responsibly and avoid being at fault in any accidents/claims. Or, if you are involved in a minor accident or your vehicle suffers minor damage, you can opt not to file a claim, therefore avoiding having to pay your deductible.
You can also inquire with your carrier to learn if they offer options for a zero-dollar deductible on comprehensive and collision coverage, which may raise your premium. Be sure you have a waiver of collision deductible in place, which will waive your deductible in the event another party is responsible for the accident and they have no coverage.
Is it better to have a $500 deductible or $1,000 deductible?
If you have a stable financial situation and a good driving record, you’re likely a better candidate for a $1,000 deductible than a $500 deductible. If so, you are less likely to file a claim and can likely cover the higher out-of-pocket expense if necessary. But if you drive frequently, drive in high-risk areas, own a less valuable car or prefer more predictable costs, you should consider a $500 deductible.
Ask the Insurance Expert
Laura Longero
Executive Editor
Laura Longero is an insurance expert and Executive Editor at CarInsurance.com, where she specializes in helping consumers navigate the complexities of the financial and insurance industries. She has 15 years of experience educating people about finance and car insurance. Prior to joining CarInsurance.com, she worked as a reporter and editor at the USA Today Network. Her expertise provides readers with practical guidance, helping them make informed choices about their financial and insurance needs.
Ask the Insurance Expert
John McCormick
Editorial Director
John is the editorial director for CarInsurance.com, Insurance.com and Insure.com. Before joining QuinStreet, John was a deputy editor at The Wall Street Journal and had been an editor and reporter at a number of other media outlets where he covered insurance, personal finance, and technology.
Ask the Insurance Expert
Leslie Kasperowicz
Executive Editor
Leslie Kasperowicz is an insurance educator and content creation professional with nearly two decades of experience first directly in the insurance industry at Farmers Insurance and then as a writer, researcher, and educator for insurance shoppers writing for sites like ExpertInsuranceReviews.com and InsuranceHotline.com and managing content, now at CarInsurance.com.
Ask the Insurance Expert
Nupur Gambhir
Managing Editor
Nupur Gambhir is a content editor and licensed life, health, and disability insurance expert. She has extensive experience bringing brands to life and has built award-nominated campaigns for travel and tech. Her insurance expertise has been featured in Bloomberg News, Forbes Advisor, CNET, Fortune, Slate, Real Simple, Lifehacker, The Financial Gym, and the end-of-life planning service.