What Is a Deductible in Car Insurance?

The term deductible is used differently depending on the type of insurance. This can create confusion for policyholders, and a question we frequently get from drivers is, what is a deductible in car insurance? 

To help answer this common question, here’s an overview of what drivers need to know about car insurance deductibles. If you’d like to learn more or talk with a car insurance expert about your coverage, contact GoAuto Insurance.  

What Is a Car Insurance Deductible? 

A deductible is the amount a policyholder pays out-of-pocket before insurance pays for a claim. With health insurance, most policyholders have an annual deductible. However, with car insurance, policyholders pay a deductible every time they make a claim. 

Drivers have a set deductible for each policy. Any time they make a claim under that policy, the driver will pay the full deductible amount, and the insurance company will pay the rest.

For example, if your collision coverage has a $500 deductible and your car needs $4,000 in repairs, you’ll pay $500 out of pocket and your insurance company will pay $3,500. 

Do All Types of Car Insurance Policies Have Deductibles? 

Not all types of car insurance policies have deductibles. For example, liability coverage does not have a deductible. Whether or not other types of policies have a deductible varies based on state laws and the insurance company. 

Collision coverage and comprehensive coverage policies almost always have a deductible. Depending on your state, your personal injury protection policy and your uninsured motorist coverage could also have a deductible. 

When buying auto insurance, it’s important to ask about deductibles, understand which claims will involve a deductible, and how much it will be. To learn more about deductibles on the policies you need, contact a car insurance professional. 

Is It Better to Have a High or Low Deductible? 

Policyholders usually get to set the amount of their deductible. Deductibles range from $100 to $2,000, with $500 being the most common car insurance deductible. 

Because drivers have some choices with deductibles, many drivers have questions about what’s the “right” amount for a car insurance deductible. The short answer is it varies from driver to driver. 

When setting an amount for your deductible, it’s important to understand the relationship between the deductible and the cost of car insurance. 

• The higher the deductible, the less you pay for car insurance. With a high deductible, you’ll pay less for insurance every period, but you’ll pay more out-of-pocket when you have a claim. 
• The lower the deductible, the more you pay for car insurance. With a low deductible, you’ll pay more for insurance every period, but you’ll pay less out-of-pocket when you have a claim. 

When picking an amount for your deductible consider: 

• Your ability to pay a higher amount if you have to file a claim; 
• Your comfort level with paying a higher amount if you have a claim;
• Your driving history; 
• The number of claims you’ve filed in recent years.

If you have questions about the right deductible for your policy, a car insurance specialist can help. At GoAuto, our team will discuss different options, explain your coverage, and help you create the right policy for your situation. 

What If My Deductible Is More than the Cost of Repairs? 

A common question we get from drivers is, what happens if my deductible is more than the cost of repairs to my vehicle? In this situation, the policyholder will pay the full amount of the repairs. 

Car insurance only covers repairs that exceed the amount of the deductible. If your repairs don’t exceed your deductible, you generally don’t even need to file a claim with your insurance company. 

Contact a Car Insurance Expert to Learn More 

Understanding insurance coverage and insurance claims can be complicated. At GoAuto Insurance, we work hard to make sure drivers understand their coverage and all terms relating to their coverage. 

This helps ensure that our customers aren’t surprised by any expenses. Plus, it helps drivers pick the right policies for them. 

Call our team today to learn more or get a free personalized auto insurance quote.