What is a car insurance deductible and how does it work?

Have you ever wondered, “What does deductible mean in car insurance jargon? What does my deductible do?”

No one likes to be caught off guard when it comes to their auto insurance so understanding the insurance deductible meaning in your policy is just as important as understanding how each different type of coverage works to protect you. Your deductible is a set amount of money that you would have to pay in order to receive reimbursement for repairs  after filing certain types of claims with your insurance company.

It’s also important to note that if you want lower auto insurance rates an auto insurance deductible can be a useful tool that you can use to make that goal attainable. Knowledge is power, and it would behoove you to know how every aspect of your insurance policy works so you can utilize it properly.

Keep reading to learn the answer to what is a deductible in auto insurance, how your deductibles work, and how an auto insurance deductible affects car insurance quotes you get online too.

If you want to see how an auto insurance deductible can lower your rates, enter your ZIP code to start comparing free quotes.

What is an auto insurance deductible?

If you need to file a collision or comprehensive claim, you’ll need to pay a deductible. This is a set amount of money that you will pay the insurance company before funds are released to you to fix your vehicle if it needs repairs.  Now, most insurance companies offer a range of deductible amounts so when you buy auto insurance, an auto insurance deductible amount has to be chosen by you before you finalize a quote.

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How does an auto insurance deductible work?

If you happened to be out driving down a beautiful wooded lane and had a deer jump into your car, you would have to bring your vehicle into your local mechanic’s shop. So when do you pay the deductible for auto insurance?

Well, let’s say that the total amount to repair your car is $3,000. If you were to file a comprehensive claim with your insurance company to help pay for the repairs, this is when you would need to first pay your deductible.

If your comprehensive deductible was $500, you would need to pay that first, and then your insurance company would give you $2,500 to help you restore your vehicle. This process would be the same if you ever had to pay your collision deductible as well.

While some insurance companies offer a $0 deductible, you must remember that the lower your deductible, the higher your rates will be.

The Cost of Auto Insurance

Even if you’re currently trying to cut down on your spending, it’s important to have an affordable auto insurance deductible. It might be alluring to secure a cheap insurance rate by hiking your deductible up to the highest dollar amount possible, but that could end up costing you quite a pretty penny if you ever needed to file a collision or comprehensive claim.

The best thing you can do to stay within your budget is to find an insurance company that offers great low rates without you having to choose an extreme deductible amount. You can shop online to find the best policy that fits your insurance and financial needs.

You can also use this data table to get an idea of what you might pay with some of the top insurance companies:

Insurance Company	Monthly Rates
	$160
	$117
	$139
	$80
	$174
	$115
	$105
	$86
	$99
	$59

Thankfully, adjusting your deductible isn’t the only way you can take control of your rates. As you become more knowledgeable about the world of insurance, you’ll discover that you have more control over your policy than you once thought possible.

How can drivers keep insurance rates low?

If you were to ask your auto insurance company, “my auto insurance deductible is low currently, but should I raise it to reduce my rates?” you would most likely be told that while this is an option available to you, it probably isn’t the best one. One of the easiest things you can do to keep your insurance rates low is to review your quotes when you shop online and see if you are eligible for any discounts.

Below you can see just how much you save with some of the top companies in the industry when you make use of all the available discounts:

Discount Name
Adaptive Cruise Control	✓	✓	✓	✓	5%	✓	✓	✓	✓	✓
Adaptive Headlights	✓	✓	✓	✓	5%	✓	✓	✓	✓	✓
Anti-lock Brakes	10%	✓	✓	5%	5%	5%	✓	5%
Anti-Theft	10%	✓		23%	20%	25%	✓	15%
Claim Free	35%	✓	✓	26%	✓	10%	✓	15%	23%	12%
Continuous Coverage		✓	✓		✓	✓	✓	✓	15%	✓
Daytime Running Lights	2%		✓	3%	5%	5%	✓	✓
Defensive Driver	10%	10%	✓	✓	10%	5%	10%	5%	10%	3%
Distant Student	35%	✓	✓	✓	✓	10%	✓		7%
Driver's Ed	10%	✓	✓	✓	10%	✓	10%	15%	8%	3%
Driving Device/App	20%	40%	✓	✓	30%	40%	20%	50%	30%	5%
Early Signing	10%	✓	✓	✓	✓	8%	✓	✓	10%	12%
Electronic Stability Control	2%	✓	✓	✓	5%		✓	✓	✓	✓
Emergency Deployment	✓	✓	✓	25%	✓	✓		✓	✓	✓
Engaged Couple	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓
Family Legacy	✓	✓	✓	✓	✓	✓	✓	✓	✓	10%
Family Plan	✓	✓	✓	✓	✓	25%	✓	✓	✓	✓
Farm Vehicle	10%	✓	✓		✓	✓		✓	✓	✓
Fast 5	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓
Federal Employee	✓	✓		12%	10%	✓		✓	✓	✓
Forward Collision Warning	✓	✓	✓	✓	5%		✓	✓	✓	✓
Full Payment	10%	✓	✓		$50	✓	✓	✓	8%	✓
Further Education	✓	✓			10%	15%		✓		✓
Garaging/Storing	✓	✓	✓		✓	✓	✓	✓		90%
Good Credit			✓	✓	✓		✓		✓	✓
Good Student	20%	✓		15%	23%	10%	✓	25%	8%	3%
Green Vehicle	10%	✓	5%	✓	10%	✓	✓	✓	10%	✓
Homeowner	✓	✓	✓		✓	5%	✓	3%	5%	✓
Lane Departure Warning	✓	✓	✓	✓		✓	✓	✓	✓	✓
Life Insurance	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓
Low Mileage		✓		✓			✓	30%
Loyalty	✓	✓	✓	✓	✓	5%	✓	✓	✓
Married	✓	✓	✓	✓			✓		✓
Membership/Group	✓	✓	✓		10%	7%		✓		✓
Military		✓	✓	15%	4%	✓			✓
Military Garaging	✓	✓	✓	✓	✓	✓	✓	✓	✓	15%
Multiple Drivers	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓
Multiple Policies	10%	29%	✓	10%	20%	10%	12%	17%	13%
Multiple Vehicles		✓	✓	25%	10%	20%	10%	20%	8%
New Address	✓	✓	✓	✓	5%	✓	✓	✓	✓	✓
New Customer/New Plan	✓	✓	✓	✓		✓	✓	✓	✓	✓
New Graduate	✓	✓	✓	✓	5%	✓	✓	✓	✓	✓
New Vehicle	30%	✓	✓	15%	✓			40%	10%	12%
Newly Licensed	✓	✓	✓	✓	5%	✓	✓	✓	✓	✓
Newlyweds	✓	✓	✓	✓	5%	✓	✓	✓	✓	✓
Non-Smoker/Non-Drinker	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓
Occasional Operator	✓	✓	✓	✓	✓	✓	✓	✓	✓
Occupation		✓			10%	15%	✓	✓		✓
On-Time Payments	5%	✓		✓	✓	✓	✓	✓	15%	✓
Online Shopper	✓	✓	✓	✓	✓	✓	7%	✓	✓	✓
Paperless Documents	10%	✓		✓	✓	5%	$50	✓	✓	✓
Paperless/Auto Billing	5%	✓		✓	✓	$30	✓	$20	3%	3%
Passive Restraint	30%	30%		40%		20%	✓	40%
Recent Retirees	✓	✓	✓	✓	4%	✓	✓	✓	✓	✓
Renter	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓
Roadside Assistance	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓
Safe Driver	45%	✓		15%	✓	35%	31%	15%	23%	12%
Seat Belt Use	✓	✓	✓	15%	✓	✓		✓	✓	✓
Senior Driver	10%	✓		✓	✓	✓	✓	✓	✓
Stable Residence	✓	✓	✓	✓	✓		✓	✓	✓	✓
Students & Alumni	✓	✓	✓		10%	7%		✓	✓	✓
Switching Provider	✓			✓	10%	✓		✓	✓	✓
Utility Vehicle	15%	✓	✓		✓	✓		✓	✓	✓
Vehicle Recovery	10%	✓	✓	15%	35%	25%	✓	5%
VIN Etching	✓	✓	✓	✓	5%		✓	✓
Volunteer	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓
Young Driver	✓	✓	✓	✓		✓	✓	✓	✓	$75

With the use of these discounts, you can not only keep your rates low but also avoid picking a deductible amount that could drain your bank account if you need to file a claim. Remember, when shopping for insurance online it’s always best to find a policy that works for you rather than the company, and isn’t the other way around.

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What You Need to Know About Your Insurance Deductible

Drivers who need to file a collision or comprehensive claim will need to pay a deductible first. You get to choose the amount of your deductible so make sure you choose one that you can afford to pay if you ever needed to file a collision or comprehensive claim.

While it may be tempting to raise your deductible in order to procure a cheaper insurance rate, the immediate reward is not worth the long-term risk. Instead, you should review every quote you receive online and make sure that you are being awarded every discount you qualify for. You can even keep your rates low by maintaining a good credit score.

Now that you know how an auto insurance deductible works, enter your ZIP code to get free quotes to see how much you can save on your insurance today.

Case Studies: Understanding Car Insurance Deductibles

Case Study 1: The Smart Choice of Deductible

Sarah’s Auto Insurance Company (SAC) offers a variety of deductible options for its customers. Alex, a policyholder at SAC, carefully assessed their budget and risk tolerance and decided to choose a deductible of $500 when purchasing comprehensive coverage. Several months later, Alex’s vehicle suffered hail damage, necessitating repairs costing $3,000.

With the $500 deductible, Alex paid the initial amount out of pocket, and SAC covered the remaining $2,500. This case study exemplifies the importance of selecting an auto insurance deductible that aligns with an individual’s financial circumstances.

Case Study 2: Lower Rates Through Discounts

Delta Insurance Services (DIS) provided coverage to a customer named Sarah. When Sarah received her initial auto insurance quote with a deductible of $1,000 for collision coverage, she decided to review her options. Sarah discovered that she was eligible for various discounts, including a safe driver discount and a bundling discount for combining her auto and home insurance.

By utilizing these discounts, Sarah was able to maintain a lower deductible of $500 without compromising coverage. This case study underscores the significance of exploring available discounts to optimize insurance rates.

Case Study 3: Balancing Deductible and Premium

Mike, a policyholder at Secure Auto Solutions (SAS Insurance), had the option to lower his auto insurance premium by increasing his deductible. Although tempted to choose a higher deductible for immediate savings, Mike sought advice from an SAS Insurance licensed agent.

The agent guided Mike to maintain a deductible that he could comfortably afford in case of a collision or comprehensive claim, striking a balance between premium affordability and a reasonable deductible amount. This case study highlights the importance of considering both short-term savings and long-term financial security when selecting a deductible.