Your car insurance deductible is the amount of money you’ll pay out of pocket for an accident before your insurance company pays the rest. For example, if you file a claim for $1,500 and have a $500 deductible, you will have to pay the $500 deductible before your insurer covers the remaining $1,000 balance.
Key things to know about car insurance deductibles
- The average car insurance deductible is $500.
- Not all types of auto insurance use a deductible.
- The higher your insurance deductible, the lower your insurance premium will be.
- If you’re at fault in a crash, you can’t avoid paying your deductible.
- Most drivers pay a deductible when they are not at fault, but there are a few exceptions.
Deductibles Work rebuilt Auto insurance deductibles work as a prerequisite for filing certain types of claims, ensuring that policyholders don’t unwittingly file claims by having them pay a portion of the cost upfront. Deductible amounts are chosen and agreed upon by the policyholder when purchasing an insurance policy.
Most auto insurance companies simply subtract the cost of the deductible from your claim payment. For example, if your mechanic bills $3,000 in repairs and you have a $500 deductible, your insurance provider will write a check for $2,500 to cover it.
Insurance: You never use a deductible. This type of insurance helps cover damage you cause to another person or to your property in an accident.
Collision insurance: You almost always have a deductible, which ranges from $100 to $1,000. This type of insurance covers your car against accidents, no matter who is at fault.
Comprehensive Insurance: Generally has a $100 to $1,000 deductible, except for certain glass repair claims. This type of insurance covers damage from events beyond your control, such as fire, flood, falling objects, and vandalism.
Personal Injury Protection (PIP): You typically have a deductible that can be as low as $100 and as high as $2,500. This type of coverage helps cover medical expenses for you and your passengers.
Uninsured Motorist Bodily Injury Coverage (UMBI): Usually does not require a deductible. This type of insurance helps pay for your medical expenses after an accident with an uninsured driver or a driver who doesn’t have high enough coverage limits.
Uninsured Motorist Property Damage Coverage (UMPD): Often has a deductible ranging from $100 to $2,000. This type of insurance covers property damage costs after an accident with an uninsured driver or a driver who doesn’t have high enough coverage limits.
Medical payments coverage (MedPay): Never charges a deductible. This type of coverage helps cover your medical expenses after an accident.
Mechanical Breakdown Insurance (MBI): You typically have a $250 deductible, though that can vary depending on your insurance company. This covers the main systems of your vehicle, such as the engine and transmission.
If you’re a reliable driver with very few prior claims that you manage and save money well, a high-deductible policy may make sense.
Choosing a car insurance deductible
To choose an insurance deductible, you’ll need to determine how much you’re willing to pay out of pocket in the event of an accident and the likelihood that you’ll have to file a claim. You’ll also want to find out how much you can save on premiums with a higher deductible and compare that to how much you would save in an accident with a lower deductible.
Factors to consider when choosing a deductible
- Likelihood of filing a claim.
- Your savings.
- How much are you willing to spend out of pocket?
- The value of your car.
- A higher deductible will lower your premiums.
- How much a lower deductible will cost per month.
- Deductible amounts for the different types of coverage you may need to use in an accident, such as PIP, collision, and comprehensive, and whether the full amount is affordable.
- Whether or not your loan or lease requires a specific deductible.
When do you have to pay auto insurance deductibles?
You must pay your auto insurance deductible if you cause an accident that damages your vehicle and file a claim using your collision insurance. If you are at fault in an accident and are injured, you will also have to pay a PIP deductible. In most situations where you use your own insurance, you’ll need to pay a deductible, sometimes even when you’re not at fault.
Examples of when you have to pay car insurance deductibles
- When you use PIP insurance to pay your own medical bills no matter who was at fault.
- When you file a claim with your collision insurance after the accidents you caused.
- When you use your own comprehensive insurance to cover vehicle damage.
- When you use uninsured motorist property damage insurance to cover vehicle damage after an accident with an uninsured or underinsured driver.
- When the fault is shared in an accident and you use your own insurance to pay for the damage and medical expenses of your vehicle.
When you are not required to pay the deductible
In most cases, you do not have to pay your deductible if you are hit by another insured driver. The other driver’s liability insurance should pay for his repairs.
You may be able to choose to purchase your own collision insurance to have your car repaired while the fault is determined. Plus, if you’re at fault in an accident, you won’t have to pay a deductible for your liability insurance to cover the cost of repairs and the victim’s medical expenses.
For more information on how deductibles affect your auto insurance or have questions about the value of your deductible, don’t hesitate to contact us.