Deductibles are the fastest way to change your premium. Pick them too high and a fender-bender hurts your wallet. Pick them too low and you overpay every month. This guide shows you how deductibles work, the math behind them, and how to set numbers that match your cash cushion.
Understanding deductibles is core to our policy pillar and ties directly into how premiums are calculated.
Simple Answer
A deductible is what you pay on your own car's claim before insurance pays the rest. Choose $500, you pay $500 on a covered claim; choose $1,000, you pay $1,000 but your premium drops. Pick a number you can pay today.
1) What deductibles apply to
- Collision: Your car hits another car or object.
- Comprehensive: Theft, hail, fire, flood, animal strike.
Liability and other people’s injuries have no deductible. Your deductible only applies to your car's damage.
2) How the math works
Example: $3,000 collision damage, $500 deductible.
- You pay $500 to the shop.
- Insurer pays $2,500.
- If damage is under $500, you pay it all and likely skip a claim.
3) Premium impact (sample)
| Deductible | 6-mo premium | Your cost on $2,500 claim |
|---|---|---|
| $500 | $720 | $500 |
| $1,000 | $620 | $1,000 |
| $1,500 | $560 | $1,500 |
Choose the deductible your savings can actually cover if you crash tomorrow.
4) Questions to pick the right number
- Cash on hand: Can you pay this deductible today without debt?
- Car value: If your car is worth $2,500, a $1,500 deductible leaves little benefit.
- Savings vs risk: How much premium do you save moving from $500 to $1,000? Is it worth the extra risk?
- Claim frequency: If you’ve had multiple claims, a lower deductible might make sense until you build savings.
4.5) Adjust by vehicle age and value
- High-value, newer car: Keep collision and comprehensive; consider $500-$1,000 deductibles.
- Mid-value ($5k-$10k): Keep comprehensive; maybe raise collision to $1,000 if you have savings.
- Low-value (<$4k) and paid off: Consider dropping collision but keep comprehensive for hail/theft.
5) High vs low deductible: pros and cons
| Option | Pros | Cons |
|---|---|---|
| Low deductible ($250-$500) | Lower out-of-pocket, easier to fix small hits | Higher premium every term |
| High deductible ($1,000-$1,500) | Lower premium, good if you have savings | More cash needed after a crash |
5.5) Common mistakes
- Choosing a $1,000 deductible with only $200 in savings.
- Dropping collision when you still owe money on the car (lenders require it).
- Not realizing rideshare apps carry deductibles as high as $2,500.
- Forgetting to update deductibles after buying a newer vehicle.
6) Special deductibles to watch
- Glass: Some policies offer $0 or lower glass deductibles.
- Wind/hurricane/hail: Certain states have separate storm deductibles.
- Rideshare: App policies can carry $1k-$2.5k deductibles; endorsements may lower them.
6.5) Decision guide: raise, keep, or drop
| Situation | Move | Why |
|---|---|---|
| Newer car, loan/lease | Keep lower deductibles | Required by lender; repair costs high |
| Paid-off mid-value car | Consider $1,000 collision; keep comp | Balance savings with realistic out-of-pocket |
| Older low-value car | Drop collision; keep comp with modest deductible | Hail/theft still hurt; collision benefit is small |
Make big changes at renewal so you avoid mid-term fees and have fresh paperwork to match.
7) Scripts to ask your agent
For math:
"Price my policy with $500, $1,000, and $1,500 deductibles and show the six-month difference."
For glass:
"Do you offer a separate glass deductible? What’s the cost difference?"
For rideshare:
"If I drive for rideshare, what deductible applies? Can an endorsement match my personal deductible?"
8) FAQ (fast answers)
Do liability claims have deductibles?
No. Deductibles apply to your car’s damage, not others’ injuries or property.
Can I change deductibles mid-term?
Often yes; some carriers restrict changes after a claim. Ask first.
Should I file a claim under my deductible?
No. Pay small repairs out-of-pocket to avoid rate increases and save claims for bigger losses.
Can I change deductibles after a claim?
Many carriers restrict changes immediately after a claim. Ask when you can adjust.
Are deductibles per claim or per policy?
Per claim. Two separate incidents mean two deductibles.
9) Action plan (10 minutes)
- Write down your savings balance—that’s your deductible ceiling.
- Ask your agent to quote $500 vs $1,000 vs $1,500 deductibles.
- Check glass, hail, and rideshare deductibles separately.
- Pick the deductible you can pay tomorrow and store the updated declarations with your policy binder.
Deductibles are levers. Set them to match your cash and risk, not guesswork. Adjust them at renewal and keep proof of the changes with your policy decoder so you always know your real out-of-pocket before a claim. Calm, planned choices now make stressful days easier. Review yearly and keep surprises away.