A deductible in car insurance is the amount you pay when filing a claim for certain types of coverage. After you pay the deductible, the insurer helps cover the remaining costs of car repairs and medical bills up to your policy limits. Learn more about how car deductibles work and how to set yours.   

How Does a Car Insurance Deductible Work? 

When you sign up for a car insurance policy, your insurer asks you to choose a deductible amount for some insurance coverage types, such as collision coverage. A standard deductible is $500, but options range from $0 to $2,000. If you file a claim requiring the deductible, you must pay the deductible amount out of pocket before your insurer will cover any damage costs.1

If accident fault is in dispute, your insurer can attempt to recover payment from the driver responsible for your car’s damage, including any deductible you paid. If you’re partially at fault for an accident, only a portion may be recovered. If your insurer successfully recovers all claim costs and you’re not at fault, the deductible you paid is reimbursed.2

Health insurance deductibles require you to spend a certain amount per year before your insurer covers any costs. Car insurance deductibles work differently as they’re event-based. So, if you have multiple covered claims throughout the year, you’ll pay a deductible each time. 

Example of a Car Insurance Deductible

Say you have a $500 deductible on your collision insurance and you rear-end another vehicle at a stop light. After exchanging information with the other driver, you call your insurance company to report the accident and file a claim.

Soon after, the insurer approves the claim and asked you to pay the deductible. You pay the $500, and your repairs total $3,500. Your insurer would then cover the remaining $3,000.

But if you didn't have collision coverage, the incident would not be a covered claim. Your insurer would say you must pay the entire $3,500 cost of repairs out of pocket. If you were not at fault for the accident, the other driver’s insurance would pay for your repairs, and you would not pay the deductible. 

Types of Car Insurance Deductibles

Car insurance deductibles are typically due when you file a claim under one of the following coverage types. 

Collision Coverage

Collision coverage helps to pay for repairs to your vehicle if you hit another car or a stationary object like a guardrail or pole. Standard collision coverage deductible amounts range from $200 to $1,000, according to the California Department of Insurance.3

Comprehensive Coverage

Comprehensive coverage helps pay for vehicle repairs if it gets damaged by a covered peril such as hail, theft, or burglary. Comprehensive coverage deductible amounts range from $50 to $1,000, according to the National Association of Insurance Commissioners.4

Personal Injury Protection (PIP)

Personal injury protection (PIP) helps cover lost wages and medical expenses for you and your passengers, no matter who is at fault in an accident. This coverage may be required in no-fault states. Unlike other coverage types, you may also be responsible for some medical expense copays with PIP, even after paying the deductible.

Uninsured Motorist Coverage

Uninsured motorist coverage helps pay for vehicle repairs if an uninsured motorist hits you. This coverage may have a lower deductible compared to collision insurance. In some states, the law limits the deductible you can be charged, such as to $150 to $500. 

Imagine you total a vehicle but still owe on the auto loan or lease. The insurer’s settlement doesn’t cover the entire amount due to the lender or car lease company. GAP insurance helps pay the difference.5 Depending on your GAP insurance policy, it may also help pay for required deductibles, or it may not.

Situations With No Deductible

Here are situations where you probably won’t pay the car insurance deductible: 

• If a car accident is the other driver’s fault: Their liability coverage covers your damages up to their coverage limits. 
• If you’re found to be at fault for damages in an accident: Your liability coverage will cover their damages up to your coverage limits.
• An uninsured or uninsured driver is at fault: Some states or insurers may not require you to pay the deductible for certain bodily injuries under your uninsured/underinsured motorist (UI/UIM) coverage. 
• Glass repair or replacement: Some insurers waive the deductible if you repair versus replace glass. In some states, insurers must provide zero-deductible window glass coverage if you carry comprehensive coverage. 
• You have a zero-deductible policy, a deductible waiver or a “diminishing deductible” endorsement on your policy: You can get a $0 deductible for some coverages or with some insurers. 

How to Choose the Right Deductible Amount

The right deductible amount will depend on your budget, your likelihood of needing to file claims, and your risk tolerance. 

Budget

If you need to lower your insurance premium, a higher deductible can help. However, you’ll want to ensure you can afford the deductible in the event of an accident or even the theft of your car. Remember, your total annual cost depends on your premium and the out-of-pocket deductibles you pay. 

In some states, your insurer can require a higher deductible amount for you if you have a history of claims. 

Risk

Consider the likelihood of filing claims for anyone on your policy. Review recent years and note any claims filed. Additionally, consider factors like the driving experience of covered drivers, the car-theft rate where you park vehicles, and weather event damage.

You might opt for a higher premium if your claim filing risk is low. For example, if you haven’t filed a claim in years, aren’t at increased risk of theft or vandalism, and don’t frequently drive in heavy traffic. If you don’t file a claim, you’ll save on your overall car insurance costs thanks to the lower premium. However, those more likely to file claims would likely benefit from the lower deductible amount if they had to file a claim. 

Risk Tolerance

The decision will also depend on the level of risk you’re willing to tolerate. If you’d rather be safe than sorry, you may prefer a low deductible and higher premium. If you’re okay with hoping nothing happens, a higher deductible could be right for you.

The Bottom Line

Deductibles are fundamental to any car insurance policy. It’s important to set your deductible amount mindfully, as it can significantly affect your overall costs for the year. Shop around and compare quotes, as deductible and premium amounts vary from one insurer to the next. If you’re unsure where to start, you can check out this list of the best car insurance companies of 2023.