Car Insurance Deductibles: What They Are and How They Work

A deductible is the amount you must pay your insurer before receiving a payout. The most common deductible is $500, but options can range from $0 to $2500.
Written by Amy Bobinger
Edited by Sarah Gray
When you file certain types of
car insurance
claims, you’re responsible for paying a set amount of money—your deductible—before your insurance company will cover the remainder of the claim. The most common deductibles are $500 and $1000, but your insurance company will typically give you a range of options to choose from. 

How car insurance deductibles work

Deductibles serve two main purposes—to share claim costs between the insurance company and the policyholder, and to help prevent frivolous claims. 
If you’re responsible for paying several hundred dollars—or more—each time you file a claim, it will reduce what the insurer must pay. It also discourages you from filing a claim each time your car gets a small scratch or ding. That’s why insurers offer lower premiums in exchange for a higher deductible.

Not all types of car insurance require a deductible

You’ll typically need to pay a deductible for the following types of car insurance coverage:
Collision coverage
: Covers repairs to your vehicle after a car accident
Comprehensive coverage
: Covers physical damage to your car from theft, vandalism, severe weather, falling objects, and more
Personal injury protection (PIP)
: Covers medical expenses and lost wages for you and your passengers after an accident (Deductible requirement may vary by state)
Uninsured motorist property damage (UMPD) coverage: Covers car repairs from an accident with an uninsured driver (Deductible requirement may vary by state)
You usually won’t need to pay a deductible for these auto insurance coverage types:
Your own
liability coverage
: Claims paid to another driver for property damage or medical bills resulting from an accident where you were found at fault
Another driver’s liability coverage: Claims for property damage or medical bills resulting from an accident caused by another driver
Medical payment (MedPay) coverage
: Covers medical expenses for you and your passengers after an accident
Uninsured motorist bodily injury (UMBI) coverage
: Covers medical expenses for you and your passengers after an accident caused by an uninsured driver

Insurance companies collect deductibles in two ways

In some cases, your deductible will be subtracted from your insurance payout. Other times, you’ll need to pay your deductible out-of-pocket. Here’s how it works:

You may have to pay your deductible out-of-pocket to a repair shop

If your vehicle is damaged in a covered claim and you take it to a mechanic, your insurance company will often pay your claim directly to that mechanic—less your deductible. Once the repairs are completed, you’ll have to pay your deductible to the repair shop before you can retrieve your vehicle.

You back into a lamppost while exiting a parking lot, causing $2,500 worth of covered damages to your car. You have
full coverage
with a collision deductible of $500, so you take your vehicle to a local mechanic and file a collision insurance claim. 
Your insurance company will pay the claim amount ($2,500) minus your deductible ($500)—so the repair shop will receive a check from the insurance company for $2,000. You’ll be responsible for paying the remaining $500 in repair costs.
While many repair shops will ask you to pay your deductible once the repairs have been completed, some may require you to pay it upfront when you drop off your vehicle.

Providers may subtract your deductible from a direct payout

If your insurance company writes you a check for your vehicle’s damages, you usually won’t need to pay your deductible out-of-pocket. Rather than requesting payment directly from you, your car insurance company simply deducts it from your payout—hence the term deductible.

A tree limb falls on your car during a storm, causing extensive frame damage. Your car, which is valued at $7,500, is declared a total loss. You have full coverage with a $500 comprehensive deductible, so you file a comprehensive claim with your insurance company for the loss. 
Because your car is totaled, the insurance company will send you a check for its total value ($7,500) minus your deductible ($500)—so your total payout will be $7,000.

You can choose to pay your deductible on a case-by-case basis

Unlike health insurance, where you have one deductible amount that you must meet annually, you must pay your car insurance deductible every time you file a claim. And in some cases, that might actually help you determine whether or not to file a claim at all. 
For instance, if your total claim amount is less than your deductible, there’s probably no point in filing a claim—you’ll have to pay for the whole amount out-of-pocket anyway, and having a claim on your record will likely increase your car insurance rates. 
If your claim amount is significantly more than your deductible, you’ll likely benefit from filing a claim for the damages, even considering the potential higher premiums.
Infographic explaining when to file a claim. After you get into a collision, you need to compare the cost estimate of the damages to your deductible. Don’t file a claim if your claim amount is close to or less than your deductible amount. Do file a claim if your claim amount is significantly higher than your deductible.

Insurance providers generally offer a range of deductibles

While most insurers will give you a choice of multiple deductibles, they don’t necessarily all offer the same options. For instance,
offers drivers a flexible range of 15 different comprehensive and collision deductibles ranging from $0–$10,000, while
Direct Auto
Safe Auto
only offer four full coverage deductibles—$250, $500, $1,000, and $2,500.  
When you’re
choosing a car insurance deductible
, consider
how much insurance you need
, the size of your savings account, and whether anyone in your household is a
high-risk driver
(meaning you have an increased chance of filing a claim).
A $0 deductible—aka “zero-deductible insurance”—is typically reserved for drivers with excellent credit and clean driving records. The same goes for
vanishing deductible
discounts. However,
drivers can add a collision damage waiver to their auto policy that pays their collision deductible if an uninsured driver strikes them.

Higher deductibles mean lower premiums

Because you’ll be paying more out-of-pocket for each claim (and as a result, are less likely to file a claim in the first place), your insurance company will generally offer you a lower premium if you raise your comprehensive and collision deductibles. And the savings can be significant—according to the
Insurance Information Institute (III)
, increasing your deductible can save you 15–40% on your premium. 
But that doesn’t mean higher deductibles are necessarily cost-effective. If you drive an older car and you have a high deductible, you might receive little to nothing after a payout, even for significant damages to your vehicle. And even if your car is newer, if you’d have trouble paying a high deductible on short notice, it’s probably not a good financial option. 
Most drivers find that a $500 or $1,000 deductible offers a good balance of affordable rates and manageable out-of-pocket expenses after a claim.
You can change your deductible when you purchase or renew your car insurance policy.
To better understand how changing your deductible might impact your car insurance rates, Jerry’s experts analyzed thousands of auto insurance policies purchased by real drivers. First, they looked at the average cost of car insurance for drivers who chose the most common full coverage deductibles: $500, $1,000, and $2,500. They found that, as expected, the average monthly policy cost went down as the deductible amount went up:
Insurance company
But because car insurance costs are so variable, our experts did a deeper dive to understand how changing the deductible can impact a single driver’s car insurance costs. They examined a number of quotes for a 35-year-old driver with a clean record at a number of different deductible levels, and they found the following:
Infographic showing a Jerry driver comparing Progressive quotes based on varying deductibles for comprehensive and collision coverage. The deductibles start at $100/$100 and go up to $2500/$2500. The quotes reflect that a higher deductible result in a lower insurance premium. The lowest deductible of $100 has a quote of $172.33, while the highest deductible of $2500 has a quote of $45.76.
Of course, deductibles aren’t the only cost factor.
Auto insurance companies calculate your premiums
by looking at your vehicle, driving record, and driver profile, including your age, insurance history, and credit score. How much you pay depends on all these rating factors plus your chosen auto insurance deductible.
When you shop for car insurance with the
app, you can choose your deductible level when you request insurance quotes, making it easy to see how adjusting your deductible can impact your rates. Plus, we compare rates from over 55 insurance companies, so you can feel confident you’re getting the best price available to you.
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Do I have to pay a deductible if I hit a car?

If you hit someone’s car and they file a claim with your car insurance company under your liability insurance, you won’t have to pay a deductible for their payout. However, if you
file a collision claim
for your damages with your own provider, the insurance adjuster will subtract your deductible from your payout on approval. 

Why do I have to pay a deductible even if I wasn’t at fault?

Car insurance deductibles have nothing to do with fault and are one of the conditions of receiving an insurance payout from your provider. 

What does a 500 deductible mean in car insurance?

In car insurance terms, a “500 deductible” means you agree to pay $500 out-of-pocket in exchange for an insurance payout from your provider. 

Is it better to have a $500 or $1,000 deductible?

Because it reduces your annual insurance premiums, it’s better to choose a higher deductible—as long as you can afford it and you aren’t a
high-risk driver

What happens if I can’t pay my deductible?

Most auto insurance policies require you to pay a deductible before receiving an insurance claim payout. If you can’t afford it, try asking your provider for financial relief, consider a personal loan, or work out a payment plan with the mechanic. 

What if my claim is less than my deductible?

If your insurance claim amount is less than your coverage deductible, your insurance company will deny it and you’ll have to pay the costs yourself.

Meet our experts

Amy Bobinger
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Licensed Insurance Agent — Expert Insurance Editor
Expert insurance writer and editor Amy Bobinger specializes in car repair, car maintenance, and car insurance. Amy is passionate about creating content that helps consumers navigate challenges related to car ownership and achieve financial success in areas relating to cars.
Amy has over 10 years of writing and editing experience. After several years as a freelance writer, Amy spent four years as an editing fellow at WikiHow, where she co-authored over 600 articles on topics including car maintenance and home ownership. Since joining Jerry’s editorial team in 2022, Amy has edited over 2,500 articles on car insurance, state driving laws, and car repair and maintenance.
Sarah Gray
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Licensed Insurance Agent — Expert Insurance Writer and Editor
Sarah Gray is an insurance writer with nearly a decade of experience in publishing and writing. Sarah specializes in writing articles that educate car owners and buyers on the full scope of car ownership—from shopping for and buying a new car to scrapping one that’s breathed its last and everything in between. Sarah has authored over 1,500 articles for Jerry on topics ranging from first-time buyer programs to how to get a salvage title for a totaled car.
Prior to joining Jerry, Sarah was a full-time professor of English literature and composition with multiple academic writing publications.

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