What is a car insurance deductible?

What is a car insurance deductible?

A car insurance deductible is the fixed amount you agree to pay on a covered claim before your insurer covers the rest. Choosing a higher deductible lowers your premium; a lower one raises it. It applies per claim, not per year, and only to coverages that repair your own car. $500 is the most common amount.

• It's your share of each claim: a $500 deductible means you pay the first $500 of every covered loss.
• You pick it at purchase: common options are $250, $500, $1,000, and sometimes $1,500 or $2,000.
• Higher deductible, lower premium: you take on more risk, so the insurer charges less.
• It applies to collision and comprehensive, not liability — your own-damage coverages.

The Insurance Information Institute notes that $500 is the most common deductible and $1,000 the second most common. For the full coverage lineup, see the types of car insurance explained.

How does a deductible work when you file a claim?

When you file a covered claim, your insurer subtracts the deductible from the payout. On a $4,000 collision repair with a $1,000 deductible, the insurer pays $3,000 and you cover $1,000 — usually paid directly to the repair shop. The deductible applies per claim and per covered loss, not once a year.

1. The shop estimates the repair. Say collision damage totals $4,000.
2. Your deductible is subtracted. With a $1,000 deductible, the insurer's share is $3,000.
3. You pay your deductible to the shop, which collects the insurer's $3,000 separately.
4. If you're not at fault, your insurer may recover your deductible from the other driver's insurer and reimburse you — this is subrogation.

If a repair costs less than your deductible, filing makes no sense — you'd pay the whole bill anyway and still log a claim. The Insurance Information Institute explains how deductibles are applied at claim time.

What is the best deductible amount — $500 or $1,000?

A $500 deductible is the most common choice nationally, balancing premium and out-of-pocket risk. A $1,000 deductible cuts collision and comprehensive premiums 15–30% but doubles what you pay at claim time — it makes sense only if you can cover that amount without straining your savings.

A practical rule: choose the highest deductible you could comfortably pay tomorrow. Comprehensive deductibles often run $100–$500, while collision deductibles usually run $500–$1,000. See comprehensive vs. collision insurance for how each is triggered.

Which car insurance coverages have no deductible?

Liability coverage — bodily injury and property damage — has no deductible, because it pays for harm you cause to others, not damage to your own car. Uninsured motorist bodily injury and, in most states, personal injury protection (PIP) also carry no deductible. Of the six standard coverage types, only collision and comprehensive use a deductible.

• Liability (no deductible): bodily injury and property damage you cause to others.
• Uninsured/underinsured motorist bodily injury (usually none): covers your injuries when the at-fault driver has no insurance.
• PIP / medical payments (usually none): medical costs after a crash, regardless of fault.
• Collision and comprehensive (deductible applies): the coverages that repair or replace your own vehicle.

Rules vary by state — some apply a deductible to uninsured-motorist property damage. The Insurance Information Institute outlines which coverages carry deductibles. For a side-by-side, see the car insurance types guide.

Should you raise your deductible to lower your premium?

Yes, if you have savings to cover the higher out-of-pocket cost and rarely file claims. Going from $500 to $1,000 typically saves 15–30% on collision and comprehensive premiums — but you take on $500 more risk per claim. If that change saves $150 a year, you need about 3.3 claim-free years to break even.

1. Check the savings. Ask your insurer what raising the deductible from $500 to $1,000 cuts from your premium.
2. Run the breakeven. Divide the extra $500 of risk by the annual savings: $500 ÷ $150 ≈ 3.3 years claim-free to come out ahead.
3. Confirm you can pay it. A higher deductible only helps if you can afford the larger bill the day a claim hits.
4. Remember it's per coverage. The discount applies to collision and comprehensive, not liability — so the dollar savings are smaller than the percentage suggests.

This is breakeven math, not advice — your savings and how often you claim decide it. For more ways to trim premium, see how to lower your car insurance and whether filing a claim raises your rates.

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