The amount you pay first
The simple answer
A deductible is the amount subtracted from a covered payment for damage to your own car. If a covered repair costs $3,000 and the deductible is $500, the insurer may pay $2,500. Liability coverage generally does not use a deductible for the other person's covered claim.
Bottom line
Choose a deductible you can afford after an unexpected loss, not just the one with the lowest premium.
A real-world example
The same claim with two deductibles
- 1.Covered repair: $3,000
- 2.$500 deductible: possible insurer payment of $2,500
- 3.$1,000 deductible: possible insurer payment of $2,000
The higher deductible increases your share of this claim by $500. Compare that risk with the actual annual premium savings quoted by your insurer.
See the difference
Lower deductible
- Less cash needed after a covered loss
- Potentially higher premium
- Can make smaller covered claims more useful
- Still subject to exclusions and limits
Higher deductible
- xMore cash needed after a covered loss
- xMay reduce the premium
- xMakes small claims less useful
- xRequires a larger emergency reserve
Insurance words translated
Three terms to know
- Per-loss deductible
- A deductible that generally applies each time a separate covered loss occurs.
- Collision deductible
- The amount subtracted from a covered collision payment for your car.
- Comprehensive deductible
- The amount subtracted from a covered non-collision payment. It can differ from collision.
Plain-English guide 1
Where deductibles usually apply
Collision and comprehensive commonly use deductibles. Depending on the state and policy, glass, uninsured motorist property damage, or other coverages may have different deductibles or options.
A deductible is not an annual amount and it is not normally paid to the insurer in advance. It is typically your share of each covered loss.
Related guidance: Compare comprehensive and collision deductibles
Plain-English guide 2
Do the break-even math correctly
Request real quotes for each deductible. Divide the additional deductible risk by the annual premium savings. This estimates how many claim-free years it could take for the premium savings to equal the extra amount you would pay on one claim.
That result is only a comparison tool. Claim frequency, multiple losses, cash reserves, vehicle value, and lender rules still matter.
Related guidance: See how deductibles affect your premium
Plain-English guide 3
Collision and comprehensive do not have to match
Many insurers allow different deductibles. A driver might choose a larger collision deductible and a smaller comprehensive deductible, but that is not automatically best.
Compare the separate price difference and the kinds of loss you could realistically absorb.
Related guidance: Estimate an appropriate coverage mix
Plain-English guide 4
A deductible can exceed a small repair
If a covered repair is $700 and the deductible is $1,000, there may be no payment. You can still ask the insurer or agent how notice requirements work before deciding what to do.
Do not assume paying out of pocket removes every reporting duty, especially when another person, a lender, or significant damage is involved.
Related guidance: Calculate a possible loan gap
What to do next
Choose your deductible in five steps
- 1Set the maximum amount you could pay tomorrow.
- 2Get quotes for at least two deductible levels.
- 3Calculate the annual savings, not a hypothetical discount.
- 4Review collision and comprehensive separately.
- 5Keep the chosen deductible in an emergency fund.
Compare a repair with your deductible
Use the claim calculator to organize the financial side of a small-loss decision.
Run the comparisonImportant limits
Deductibles and claims are governed by the policy and state rules. Ask how glass, UM/UIM property damage, lender requirements, and claim reporting work in your contract.
