What is a deductible? This is a very common insurance question and probably the easiest to explain: An auto insurance deductible is what you pay “out of pocket” on a claim. As an example, if you have a $500 deductible and $4,000 in damage from a covered accident, you are only responsible to pay $500 for repairs. Your insurance would pay the remaining $3,500.

How Deductibles Work

Your auto deductible comes into play each time you file a claim. If you total your car, your insurance will provide payment for the vehicle’s current value, minus your deductible. So, if your car is worth $25,000 and your deductible is $1,000, you will receive a payment of $24,000.

However, if the damage to your vehicle amounts to less than your deductible amount, then your insurance would not provide payment. Say you had a $1,000 deductible but you only suffered $750 in damages, you would be fully responsible for the repairs.

What Types of Coverages Require a Deductible?

Your standard liability coverage, which covers the cost if you damage someone else’s property or injure someone with your car, never requires a deductible. Insurance coverages like comprehensive and collision coverage do require a deductible. You can always find your deductible listed on your policy declaration page.

Choosing A Deductible That is Right for You

Auto deductibles are flexible and tend to range from $500 to $2,000. There is no right or wrong deductible, it comes down to what you feel more comfortable with:

Higher deductible = lower car insurance rate and higher out-of-pocket costs

Lower deductible = higher car insurance rate and lower out-of-pocket costs