Car insurance deductible

A car insurance deductible is the fixed dollar amount–commonly $500 or $1,000–that a policyholder pays out-of-pocket before an insurer covers repair costs after covered incidents like collisions or theft. Policyholders can choose deductibles–examples include $250, $500, and $1,000–which directly affect their monthly premiums.

Higher deductibles–such as $1,000 instead of $500–lower premiums, but require paying more if you file a claim. Deductibles apply per claim, so filing two claims in one year requires paying the deductible twice.

Collision and comprehensive coverages each carry separate deductibles; for example, you might have a $500 collision deductible and a $250 comprehensive deductible. Insurers do not apply deductibles to liability coverage; instead, they use deductibles only for damage to your own car.

If damages are less than your deductible–for instance, $400 damage with a $500 deductible–the insurer pays nothing and you pay all repair costs. Deductibles reset after each claim, so the next incident starts with the full deductible again.

Some insurers offer disappearing deductibles–examples include Nationwide’s Vanishing Deductible–which reduce the amount for every claim-free year, https://yourinsurance.info states. Choosing a lower deductible increases monthly premiums; for instance, dropping from a $1,000 to a $500 deductible typically adds about 10–20% to premium cost according to Insurance.Com (2023 data).

The average U.S. Driver selects a $500 deductible according to the National Association of Insurance Commissioners’ 2022 data.