How Do Car Insurance Deductibles Work?

Car insurance deductibles explained. You'll learn about choosing the right amount. You'll also learn how they work after your car has been damaged in an accident. You'll also find out who pays when the accident is not your fault

smashed car headlight

A car insurance deductible is the amount you must pay when having your car repaired after an accident.

Policies can include comprehensive, collision and/or liability coverage.

Liability insurance covers damages caused to another driver and doesn’t include repairs to your own vehicle. The deductible only applies to comprehensive and collision claims.

Car Insurance Deductible Basics

The amount of your deductible is determined by the terms of your car insurance policy. In general, the higher your deductible, the lower your monthly premiums are. There are policies that offer no deductible, however, they’re rare and cost a lot more than policies that have deductibles.

If you have a $1,000 deductible and you file a claim, this is the amount you owe your insurer. Once you pay the deductible, your insurance company will process the claim. Then your carrier pays the difference between your deductible and the total amount for repairs. At least up to the limit of your policy.

How Deductibles Affect Rates

The amount of your deductible is one of the few ways you can directly lower your insurance premium. If you raise your deductible to $1,000 or more, you'll pay less than if your deductible is $500 or $250. Those are the most common auto insurance deductible choices. People with high deductibles file fewer claims. And more of the repair costs associated with accidents are covered by the deductible when its high. How much you can save by raising your deductible depends on your insurance. Each one determine rates their own way.

That's why it's so important to shop around if you want to find the lowest insurance rates possible. Start by taking a few minutes to compare quotes from top companies to find the best deal.

Do I have to Pay a Deductible if an Accident Wasn’t My Fault?

Sometimes after an accident, liability may not be clear. You may be asked to file a claim with your car insurance company anyway. After your car has been repaired and your deductible has been paid, your insurance company may help out. They could decide to pursue action against the other driver’s insurance policy.  If your insurance company can recover funds from the other driver’s insurance company, they must reimburse your deductible payment.

If your car insurance company doesn't recover money from the other driver’s insurer, you can still get your money back. You can take the other driver to small claims court to get the amount you paid for your deductible.

Do You Have to Pay Your Deductible if Your Car is Totaled?

Yes, whether your car is being repaired or totaled, you'll always be responsible for paying your car insurance deductible. If the car is repaired, your insurance company will cut a check for the amount of repairs, minus your deductible. If it’s totaled, they'll pay you the value of your car less your deductible.

When paying you for the value of your car, if it’s totaled, insurance companies don’t pay off your loan. This is why having GAP insurance is such a good idea. GAP insurance is for when the value of your car is less than what you owe on it. That's when the GAP policy pays the loan balance for you. And as with repairs, they'll subtract the amount of your deductible, so you'll still be responsible for that amount.

There's only one time a car insurance companies may “waive” your deductible. That’s when there’s a two car accident and other driver is at fault. Plus their insurance company accepts fault and agrees to reimburse your insurance carrier for the full amount.

High Deductible Insurance

When considering lower expenses in your budget, you may be tempted to increase your deductible. However, this may not be in your best interest. It depends on how easily you can access the funds necessary to pay your deductible.

Typically, when you file a car insurance claim, the deductible must be paid up front, when repairs are completed. If you can't get this money quickly enough, you may have to take out a high interest personal loan. This could easily erase any savings you may have accrued by having a larger deductible on your car insurance policy.

Here’s another way to look at it. Say you decide to go with a higher deductible of $1,000 and your premium is $20 cheaper a month. That'll save you $240 a year. You’re thinking, “Awesome! That’s money back in my pocket!” And this is quite true. What if, however, you were somehow involved in two accidents in one year? If your deductible had been $500, your $240 savings would quickly turn into a $760 deficit. Even a single claim a year would end up costing you $260 more than if you left your deductible at $500.

Car Insurance Deductible FAQ

Q: Can I write off my deductible on my taxes?

A: No, not even if the vehicle is used for business purposes. You cannot deduct a deductible.

Q: I need my windshield replaced. Do I have to pay a deductible?

A: The short answer is yes, but some policies have an option for windshield replacement with no deductible.

Q: My car was vandalized. Will I have to pay a deductible to have the damage repaired?

A: Yes, but the deductible for vandalism is far less than for collision. Some policies only require that you pay $50. So if the cost to repair damage from vandalism is $5,000, you'd only pay $50.

Q: Do I have to pay a deductible to fix my car if I hit a deer or other animal?

A: Yes, but the deductible could be far less than what you'd pay if you struck another vehicle. The amount would depend on the specifics of your plan. The accident may not be your fault, but your insurer will expect you to chip in your deductible.

Q: What happens if my repairs cost less than the deductible?

A: If, for example, your deductible is $1,000 and your repairs cost $800 you'd still be responsible for paying the $1,000 deductible. How you handle this situation is your call, but arithmetic is on the side of paying this out of pocket. But be aware that you may have to file an accident report if the damages exceed a certain amount.

Q: What happens if I can’t afford to pay my deductible?

A: You're out of luck, your insurance company won’t authorize repairs if you don’t pay your deductible. You can elect not to have your car repaired. But even then you’re on the hook for every expense including towing and the estimate.

Q: Do I have to pay a deductible if the accident was not my fault?

A: Yes, you have to pay a deductible no matter who was at fault. But you may be able to get your money back from the insurance company. You might even be able to get it back from the person that hit your car. Even if your car was involved in a hit and run you're required to pay the deductible. Your car could even be hit while parked on the straight. You still have to pay the deductible.

Q: I was in an accident and paid the deductible but was in another accident a month later. Do I have to pay the deductible twice?

A: Yes, unlike health insurance where deductibles cover an entire year, car insurance deductibles must be paid for each claim. Each accident requires a separate claim and each claim requires payment of the deductible.

Q: A friend borrowed my car and got into an accident. Who pays the deductible?

A: You do. Insurance follows the car, not the driver. If you borrowed someone else’s car and got into an accident they'd be responsible for the deductible. The right thing to do is, of course, to pay the deductible for them. If you don’t they might sue you.

Q: Does a higher deductible reduce the cost of my insurance premium?

A: Yes, but if you're in an accident you'll have to shell out more money to repair your car.

Do I have to pay the other person’s deductible if a car accident was my fault?

A: If you were at fault in an accident, then yes, you're responsible for the other party's deductible. If you refuse to pay it, you'll probably be contacted by their insurance company, a lawyer or both. Save yourself the expense of being sued and just pay the deductible.

Q: Do I have to pay a deductible if someone steals my car?

A: Yes, automobile theft is covered by insurance but the owner is still required to pay a deductible.

Q: Is it legal for a repair shop to offer to pay my deductible?

A: No, it’s perfectly legal for them to incent you to do business with them. But it's illegal for them to attempt collecting the difference from your insurance company by charging extra for repairs.

Q: Is the cost of towing my vehicle included when I pay my deductible?

A: Relax, your insurance company will not try to double charge you for towing. The cost of having your vehicle towed will be part of the total bill. You'll only be responsible for paying a single deductible to cover all expenses.

Q: How can I get out of paying my deductible?

A: You can’t get out of paying a deductible. If you’re in an accident, you're required to pay the deductible you agreed to when you purchased your insurance policy. You may or may not be reimbursed depending on who was at fault. But if you want your car repaired you'll need to pony up the deductible first.

Q: Will my deductible pay for fixing dents and dings on my car?

A: You bet your insurance company will pay to get them fixed. But if you can’t prove they’re all from the same incident you'll have to file a claim for each one. And that means you'll have to pay a deductible for each claim. But if you can prove the damage occurred at the same time, you'll only have to file one claim. And pay a single deductible.

Q: Does uninsured or underinsured motorist coverage mean I don’t have to pay a deductible?

A: Sorry to be the bearer of bad news. But both uninsured and underinsured motorist insurance covers the cost of injuries from in an accident. Collision insurance covers the damage to your car.

Q: If I was an accident was my fault do I have to pay the other driver’s deductible?

A: Yes, you do. You have to pay everyone’s deductible, even if there were more than two cars involved in the accident. And if you want to get your own car repaired, you’ll have to pay your own deductible, too.

Q: Do I have to pay a deductible if my state offers no-fault insurance?

A: No-fault insurance refers to bodily injury, medical expenses, and some wage related losses. Damage to your car does not fall under no-fault insurance. You'll need to pay a deductible for car repairs even if you live in a state with no-fault protection.

Q: If I am partially at fault for an accident do I have to pay a deductible?

A: Yes, but you're only responsible for what’s been determined as your share of the fault. Say your deductible is $1,000 and it’s determined that you’re 20% at fault. You must pay your insurance company $1,000. That being said, you can go after the person with 80% of the responsibility and tray to recover the other $800. This process of recovering money is referred to as subrogation. Sometimes your insurance company will help you. Either way, expect to pay $1,000 initially if you want your car repaired.

Q: What is subrogation?

A: Subrogation is when a car insurance company goes after reimbursement from the insurer of the at fault driver. As in the case of an accident.  The insurance company will ask for the money they paid to have a car repaired or totaled, plus the deductible.  If the insurance company receives the funds, they reimburse their policy owner’s deductible. LLC has made every effort to ensure that the information on this site is correct, but we cannot guarantee that it is free of inaccuracies, errors, or omissions. All content and services provided on or through this site are provided "as is" and "as available" for use. LLC makes no representations or warranties of any kind, express or implied, as to the operation of this site or to the information, content, materials, or products included on this site. You expressly agree that your use of this site is at your sole risk.