The higher your deductible, the less you'll pay upfront for coverage. Choosing your deductible is about balancing your budget and the amount of risk you can tolerate. While lower deductibles can save you money on premiums, there may be compensations if your car needs repairs after an accident. A car insurance deductible is what you pay “out of pocket” on a claim before your insurance covers the rest.
Collision protection, all-risk, coverage for uninsured and personal injury drivers typically have an auto insurance deductible. You can generally choose between a low deductible and a high deductible. A low deductible means a higher insurance rate, while a high deductible means a lower insurance rate. In most cases, a lower deductible means higher monthly payments.
If you have a low deductible, you have more coverage from your insurance company and have to pay less out of pocket in the event of a claim. A higher deductible means a reduced cost on your insurance premium. This information is not an insurance policy, does not refer to any specific insurance policy, and does not modify any provision, limitation or exclusion that is expressly stated in any insurance policy. You can opt for a higher car insurance deductible because you're betting against having an accident, but if you've had accidents in the past and drive often on higher-traffic roads, you're more likely to file a claim and pay a deductible.
After you pay the amount of the car's deductible, your insurer will cover the remaining cost to repair or replace your vehicle. The car insurance deductible is the amount of money that your auto insurance company will deduct from the claim check. Drivers who increase their deductibles can save between 7% and 28% a year on average, according to a Forbes Advisor analysis of deductibles and auto insurance rates. If you live in a state where cracked windshields are common, you might want to choose a low car insurance deductible to replace your windshield.
The amount you'll save by increasing your car insurance deductible also depends on your insurance company. In most cases, you can increase or decrease your car insurance deductible at any time during the life of the policy. That's because the lower your deductible, the more your car insurance company will have to pay if you file a claim. If increasing your car insurance deductible will help you maintain car insurance coverage or manage other necessary household bills, it's worth considering.
Increasing your car insurance deductible can help you reduce your annual insurance costs by several hundred dollars.