Car Insurance and Deductibles: How it Works

Car insurance deductibles refer to the finance that comes out of your pocket for specific claims. You must pay the predetermined amount even before the insurance policy covers your bills. For example, if your car is damaged in an accident, you must pay money before your insurance coverage will set in to take over.

Car Insurance and Deductibles: How it Works

That amount you pay is called a deductible; the amount you pay depends on the insurance coverage you have opted for.

To guide you in choosing the right deductible, this article will highlight the most important things you need to know about deductibles. Keep reading to catch on.

Car Insurance Deductibles and How it Works

Simply put, a car insurance deductible is the amount of money insurance companies subtract from your payment for certain special events.

Deductibles are usually paid in large amounts, ranging from $100 to $2500. For example, if you have a bill of $2500 in eligible repairs, you probably will have to pay a $500 deductible.

If the claim is less than your deductible, you will not receive any money from the insurance company.

Increasing your deductible will certainly lower the money you have to pay for your car insurance; however, be prepared to pay a higher amount when there is a claim.

Deductibles come up at several points, it may be during a medical bill for car accidents. However, how it works varies in every situation.

Deductibles all boil down to what works best for you, you may decide to pay more out of your pocket by choosing a cheaper premium or pay less deductibles by choosing an expensive premium.

Whichever one you choose; you will have to pay for deductibles when a claim is submitted. The advantage of deductibles is that you can choose how much to pay.

When to Pay Car Insurance Deductibles

Deductibles are paid whenever a claim is filed for your chosen car insurance coverage, such as comprehensive and collision coverage.

Comprehensive collision coverage covers damages to vehicles in a wide variety of situations, including car repairs.

Uninsured and underinsured motorist coverage also includes deductibles and personal injury protection insurance. However, for the PIP coverage, a deductible depends solely on the state.

Vanishing Deductibles

A vanishing deductible refers to a diminishing deductible which is an incentive offered to drivers by insurance companies.

This incentive is offered to drivers who have proven to have safe driving habits. So the longer they go with a clean driving record the more the price of their deductibles decreases.

Drivers who go from year to year without a traffic violation, car accident, speeding ticket, and other bad driving records are eligible for vanishing deductibles.

While renewing your policy as a driver, your deductible is automatically reduced, and if you go long enough without a single lapse, you could successfully get a $0 deductible.

Car insurance companies like Allstate, Nationwide, Progressive, and Travelers offer vanishing deductible programs to their clients.

Car Insurance Companies without Deductibles

Some types of insurance coverage do not cover deductibles. This is usually based on the state involved. Below are some coverages without deductibles:

  • Bodily injury liability coverage
  • Property damage liability

Car Insurance Companies with Deductibles

Some types of insurance coverages have deductibles. Below are some of them:

  • Liability Insurance
  • Collision Insurance
  • Comprehensive Insurance
  • Personal injury protection
  • Medical payments coverage
  • Medical payments coverage
  • Underinsured/uninsured motorist coverage

Tips for Choosing Car Insurance Deductibles

Follow the tips below to choose your car insurance deductibles:

  • Choose the deductible that matches the highest amount of money you can afford if there is an accident
  • You can choose deductibles according to the amount you have in your savings
  • To avoid deductibles, you can choose a zero-deductible car insurance policy
  • You can choose a deductible that is in line with the value of your car
  • If it’s a lent car, choose a deductible that matches the requirements of your lender


If I Damage Someone else’s Car, do I Have to Pay a Deductible?

If you damage someone else’s car, you do not have to pay a deductible because the other person’s damages are covered under your usual liability coverage.

However, get into an accident where another driver hits your car and causes damage to your car. The other driver at fault will take over the cost of repairs from his liability insurance. Either way, you do not have to pay a deductible.

What can be Referred to as a Good and Cheap deductible?

A reasonable deductible that is best for you will depend solely on your insurance needs and your budget. However, the cheapest should come at $500.

What If the Damage done is more than the Deductible?

If the damage and cost of repairs are more than your deductible, you can file for a claim with your insurer. However, you must pay the deductible first then the insurance company can pay up the balance.

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