Car Insurance Deductibles Guide: 5 Key Things to Know in 2022

October 31, 2022

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what is the car insurance deductible?

The 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 need to pay the $500 deductible before your insurer will cover the remaining $1,000 balance.

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key things to know about car insurance deductibles

The average auto insurance deductible is $500.
Not all types of auto insurance use a deductible.
The higher your auto insurance deductible, the lower your auto insurance premium.
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 some exceptions.

how car insurance deductibles work

Auto insurance deductibles work as a prerequisite for filing certain types of claims, ensuring policyholders don’t file frivolous claims by having them pay a portion of the cost up front. deductible amounts are chosen and agreed upon by the policyholder when purchasing an insurance policy.

Reading: How to pay car insurance deductible

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 insurer will write a check for $2,500 to cover it.

Deductibles work the same for every type of auto insurance coverage that uses deductibles. Plus, auto insurance deductibles work much like deductibles for health insurance, homeowners insurance, and business insurance.

Learn more about how auto insurance deductibles work.

what types of auto insurance have a deductible?

civil liability insurance: without excess

Liability insurance never uses a deductible. This type of insurance helps cover damage you cause to another person or their property in an accident.

collision insurance: excess

Collision insurance almost always has a deductible, which ranges from $100 to $1,000. This type of insurance covers your car from accidents, no matter whose fault it is.

full risk insurance: franchise

Comprehensive insurance generally has a deductible of $100 to $1,000, except on 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: deductible

Personal Injury Protection (PIP) often has a deductible that can be as low as $100 and as high as $2,500. however, utah does not allow deductibles for personal injury protection.

This type of coverage helps cover medical expenses for you and your passengers. it is required in 13 states.

Uninsured Motorist Bodily Injury Coverage: No Deductible

Uninsured motorist bodily injury (umbi) coverage generally 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: Deductible

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: no deductible

medical payments coverage (medpay) never charges a deductible. This type of coverage helps cover your medical expenses after an accident.

mechanical breakdown insurance: excess

Mechanical Breakdown Insurance (MBI) typically has a $250 deductible, though that can vary by insurer. mbi covers the major systems in your vehicle, such as the engine and transmission.

how deductibles affect car insurance premiums

Note: Rates are for a six-month collision coverage policy, according to progressive.com.

While raising your deductible may result in a lower premium, be sure to consider the overall value. jumping from a $1,000 deductible to a $2,000 deductible can save you just 6% or so, for example. If that 6% in savings is only equal to about $5 each month, is it worth paying an extra $1,000 out of pocket after an accident? probably not.

However, if you’re a prudent driver with very few prior claims that you manage and save money well, a high-deductible policy may make sense. Learn more about how deductibles affect auto insurance.

how to choose a car insurance deductible

To choose an auto 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 a higher deductible can save you on premiums and compare that to how much you’d save in an accident with a lower deductible. the most common deductible amount is $500, but companies often offer deductibles ranging from $100 to more than $2,000.

Learn more about choosing a car insurance 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
how much a higher deductible will lower your premiums
how much a lower deductible will cost per month
deductible amounts for 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 car insurance deductibles have to be paid?

You have to 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 accidents you cause.
when you use your own comprehensive insurance to cover vehicle damage.
when uninsured motorist property damage insurance is used 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 your vehicle damages and medical expenses.

when you are not required to pay your car insurance deductible

In most cases, you don’t have to pay your deductible if you’re hit by another insured driver. the other driver’s liability insurance should pay for your repairs.

You may be able to choose to purchase your own collision insurance to have your car repaired while the fault is determined. In this case, you’ll need to pay your deductible up front, but your insurance company will seek full reimbursement from the at-fault driver’s insurer through a subrogation claim.

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.

Learn more about when you pay auto insurance deductibles.

how to avoid paying car insurance deductibles

You can avoid paying your car insurance deductible by asking your mechanic to waive the deductible in exchange for your business. Also, your insurance company may waive your deductible for comprehensive insurance if it is a glass repair claim.

However, if you’re at fault in an accident, there’s not much you can do to get out of your collision insurance deductible if you want repairs to your own vehicle covered. You could try to work out a payment plan for the balance with your mechanic, but the mechanics can legally keep your car until the debt is paid.

Learn more about how to avoid paying car insurance deductibles.