Jessica Sautter is a Content Writer for CarInsuranceCompanies.com with a Bachelor’s Degree from Eastern Michigan University in Elementary Education with a Major in Reading and a Minor in Mathematics.

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Chris Harrigan has an economic degree from Limestone College and an MBA from Clemson University. He previously managed auto insurance claims for Enterprise Rent-A-Car. Currently, he is using his business and insurance expertise to provide insurance data analysis and visualizations to enhance the user experience.

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Reviewed by Chris Harrigan
Former Auto Insurance Claims Manager

UPDATED: Sep 14, 2020

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  • Your car insurance deductible plays a huge role in the amount of your monthly premium
  • Car insurance deductibles apply to almost all components of car insurance policies
  • Almost all car insurance companies offer policies using the same deductible formula

Deductibles play a large factor in auto insurance, however, understating what a car insurance deductible is will be critical to deciding whether or not to secure a policy with a low deductible or high one.

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Table of Contents

What is a car insurance deductible?

Choosing a car insurance deductible will have a direct impact on your auto insurance premiums. The deducible defines how much money you agree to pay out of pocket for certain covered incidents.

For example, let’s assume you have a $25,000 comprehensive car insurance policy with a $500 deductible.

In the event of an accident, you will be responsible for paying the first $500 of damage (under uninsured events).

Once the $500 is paid, then the car insurance company will pay the remaining cost, up to the limits of your policy coverage.

If the total damage is $5,000 you will pay $500 and the car insurance company will pay $4,500.

Car insurance deductibles apply to almost all components of car insurance policies including:

  • Comprehensive
  • Collision
  • GAP insurance coverage

Sometimes in the event of a total loss, it’s possible to have a policy with a feature where the deductible is waived.

Most car insurance companies offer policies with deductibles ranging from $250 to $1,000 and usually the higher car insurance deductible you choose the lower your car insurance premiums will be.

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Should I always pick the highest car insurance deductible?

Remember that a car insurance deductible is an out-of-pocket cost and drivers should only choose a deductible which they can afford in the event of an accident.

Car accidents are usually unforeseen events and you should have the ability to pay this deductible.

Should you fail to pay the deductible, it’s possible your car will not be released by the repair shop and/or repairs fully completed until the bill is paid in full.

What car insurance companies offer the best car insurance deductibles?

Almost all car insurance companies offer policies using the same deductible formula.

Some companies will waive a deductible in the event a car is determined to be a total loss or if you use an auto repair shop on their approved list.

This will vary from one car insurance company to the next so make sure to ask any potential providers about the unique ways they offer customers to avoid paying a deductible in the case of an accident.

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References:

  1. https://www.statefarm.com/insurance/auto/coverage-options/comprehensive-coverage
  2. https://www.trustedchoice.com/car-insurance/auto-coverage-types/gap/
  3. https://www.nationwide.com/vanishing-deductible.jsp
  4. http://www.21st.com/auto-insurance-information/understanding-car-insurance-deductibles.htm