How Does A Car Insurance Deductible Work?

Matthew Lloyd
January 15, 2021
Matthew Lloyd

How Does A Car Insurance Deductible Work? When it comes to car insurance, there are no annual deductibles like health insurance. People who take car insurance are only responsible for the deductibles states in their policy every time they file a claim. For instance, if someone totals their car, they will receive the money equal to the car's current value after subtracting the deductible.

Collision and comprehensive are the most common insurance coverages that come with deductibles. In some states, people can also choose deductibles for underinsured, uninsured, or for personal injury protection. For all the different types of coverage, the deductibles work the same.

Common Car Insurance Deductible Questions

As mentioned, a person only has to pay the car insurance deductible while filing a claim. The following example explains how car insurance deductible works.

If the total current value of a car is 20,000 US dollars, and the deductible is 2,000 US dollars, then the person will receive 18,000 dollars.

Whereas, if someone damages their car that costs less than the actual deductible, then the insurer won't be liable to pay anything. For example, if the total damage to a car amounts to 1500 US dollars and the deductible is 2,000 US dollars, then the car owner will get nothing from the insurer. That's because the insurance companies only cover damages more than the car insurance deductible.

What Deductible Should One Choose for Car Insurance?

The typical amount of car insurance deductible is somewhere between $100 to $2,000 US. The most common amount of deductible that people choose for their cars is $500. Selecting a deductible depends upon the driver's personal preferences, and there can never be any wrong choice.

There are high deductible plans that come with higher out of pocket costs but a lower rate of car insurance. On the other hand, the low deductibles come with lower out of pocket costs but a high car insurance price.

Considering the value of the car is important while selecting a deductible. For example, if a person owns a car that's worth $2,200 US, then opting for a deductible of $2,000 US is not a wise choice.

How Often Does a Driver File a Claim?

It means that there is a very high probability that one will need to file a claim. If a person lives in a place where cracked windshields are not a rare thing, they want to opt for a low deductible for their car's windshield.

If someone is betting against having an accident, then they might select a higher car insurance deductible. According to Sweeney Merrigan Law LLP statistics, about six million car accidents take place each year in the US alone.

How Does Deductible Affect the Price?

Let's suppose a person pays $420 biyearly; then the following table shows how collision deductible adjustment will change the price. Increasing the deductible from $1,000 to $2,000 offers low savings; on the other hand, increasing the deductible from $100 to $250 offers more savings.

Deductible | Monthly Price

100 dollars | 250 dollars

100 dollars | 182 dollars – 27 percent

500 dollars | 129 dollars – 29 percent

100 dollars | 89 dollars – 31 percent

500 dollars | 84 dollars – 6 percent

When Does One Pay an Auto Insurance Deductible?

If one files a claim and it gets approved, the car insurance deductible will be applied when the insurance organization offers the money. The car owners don't need to write any check or pay to the insurance company either. The insurer simply deducts the car insurance deductible from the car owner's claim's money. For example, if someone files a claim for $10,000 and their deductible is $2,000, they will receive the approved payout of $8,000.

When Doesn't a Person Need to Pay Car Insurance Deductible?

If a person falls under any of the following scenarios, they won't need to pay a deductible.

When some else files a claim

You don't need to pay a deductible on any liability claim. It means that you have to pay nothing for an accident where you hit someone else and cause damage and injuries. Depending upon your policy limits, your insurance company will pay for all the damage.

When another insured driver is at fault

If an insured driver hits another vehicle and gets officially deemed liable, then their insurer will pay for all the damages and repairs. In this case, you won't have to pay any deductible only if you choose. Other than that, if you opt for your own insurance coverage, then your insurer can ask for reimbursements from the other person's insurer to pay for the damage as well as for the deductible. But if the fault is mutual, then you'll have to pay for the deductible.

When a person is elected for no deductible

There are situations where a driver can opt for $0 deductible on their comprehensive coverage policy.

When a person has free repairs

In many states, people don't have to pay any deductible where the damage can't be repaired.

Final Word

People with car insurance need to pay for the deductibles when they file a claim for damages or injuries. It depends upon the car insurance coverage type how much a person has to pay for their deductible. You can learn more about car insurance from us here at Official Car Insurance, where you can also apply for quotes from a range of auto insurance services. Not only will it allow you to compare the different quotes, but it will also help you to find the best auto insurance.