If you need to
make an insurance claimbut you can’t afford your deductible, you could take out a loan, hold off on making your claim, or consider payment plans.
Surprise! A tree fell on your car. That high deductible sounded great when you were only thinking about the low monthly fees but now you have to pay the bill.
But what happens if you can’t pay the bill?
What is an auto insurance deductible?
Simply put, an
auto insurance deductibleis the amount of money you are required to pay out-of-pocket for an accident before your insurance company pays the rest.
For example, if you file a claim for $2,000 and you have a $500 deductible, you will have to pay the $500 deductible before your insurer will cover the remaining $1,500 balance.
Unlike medical insurance in which the provider covers the cost for certain services after reaching the fixed dollar amount, auto insurance resets every time.
What to do if you can't afford your insurance deductible?
Take out a loan
If the damage to your vehicle is more than just cosmetic, you might have to consider taking out a loan to pay your deductible.
If you decide to go this route, your options include a
personal loan, a cash advance on your credit card, or a payday loan.
What’s nice about payday loans is that they rarely require a background check and you usually receive your money within one business day.
Watch out for the interest rates, though. While some states have strong rate caps, interest in other states can creep
above 600%. You will also need to leave a form of payment, such as a credit or bank account number, in order to repay the loan when your next paycheck arrives.
Double-check your policy
If you’re on the hook for a deductible you can’t afford, read the fine print of your policy (cue the magnifying glass!) or discuss your policy details with your insurer.
You might discover that you don’t have to pay your deductible until after your vehicle repairs are complete. Instead, your insurer might subtract the amount of your deductible from your claim. For example, if you have a $3000 claim and your deductible is $500, your insurance company will pay you $2500.
Hold off on filing your claim
If the damage is more cosmetic and does not affect the performance of your car, you might consider
waiting to file your claim.
Not only will this give you some time to wait for your next paycheck, but it also gives you the opportunity to shop around for a well-reviewed, affordable mechanic.
There are some additional factors to consider if you should hold off on filing your claim. If your vehicle has already been towed or moved to a lot, the storage fee to keep it may end up costing you more money in the long run.
Second, you need to be aware of your state’s statute of limitations on filing a claim after an accident. This is the
amount of time you have to file a claimafter the accident occurs. You only need to worry about this if you are waiting more than two weeks to raise the necessary funds to pay your deductible.
Most insurance companies recommend filing your claim as quickly as possible in order to ensure that the process goes smoothly and you get your money fast.
Inquire with your mechanic about a payment plan
If you can’t afford your deductible, you might consider talking with your mechanic about different payment options.
Some repair shops might be willing to come up with a payment plan that helps get you back on the road quicker without having to take out a loan.
In both cases, make sure to ask about payment plan options before the mechanic starts work on your vehicle. In most states, mechanics are entitled to hold onto your vehicle until payment is complete.
Dip into emergency savings
If you have an emergency savings fund, now is the time to dip into it, especially if you use your vehicle to get to work.
The days you could lose by not going into the office—not to mention the stress you’ll feel having to organize rides for your kids or significant others—means it is money well spent.
If you don’t have an emergency fund, now is your chance to get ahead. Set aside $50 or $100 dollars to start and try to add to it each month. Even if it’s just a small amount you’ll be surprised at how quickly it adds up and how it could save you from having to worry about a situation like this in the future.
Do I have to pay my deductible if I'm not at fault for the accident?
The short answer is no.
The vast majority of the time, the at-fault driver's
liability insurancewill cover your expenses after an accident.
However, there are some instances in which the insurance adjuster takes a long time to determine fault, which can affect when you receive compensation. In those cases, it's best to pay your deductible—if you can—and get your repairs taken care of quickly.
Once your insurance company recoups your costs from the at-fault driver’s insurer, they will refund you the correct amount.
How do I get a lower auto insurance deductible?
You should always be able to afford your deductible if the need arises. If you can’t afford your current deductible, download
In less than 45 seconds, our
trustworthy insurance shopping super appcollects all of your information from your existing insurer. Choose from competitive quotes from up to 45 top insurance companies and Jerry takes care of the rest—securing your new policy and canceling your old one.
No long forms. No calling around. No hard work. Just savings. The average Jerry user saves $879 a year on
"Saved me $110 a month and lowered my deductible my $250"—Jerry customer
Haven’t shopped for insurance in the last six months? There might be hundreds $$$ in savings waiting for you.
Judith switched to Progressive
Saved $725 annually
Alexander switched to Travelers
Saved $834 annually
Annie switched to Nationwide
Saved $668 annually