Can I Raise My Deductible to Save on Car Insurance?

Last Updated on April 17, 2023

Some insurance experts recommend raising your deductible to save on car insurance. But can raising your deductible really lower premiums?

Yes, most insurers charge lower premiums if you raise your deductible. You save money on premiums, although you pay more to make a claim.

Keep reading to learn everything you need to know about raising your deductible to save on car insurance.

Yes, Raising Your Deductible Can Lower Insurance Premiums

All major insurance companies charge lower premiums if you have a higher deductible.

Most car insurance deductibles range from $250 to $2,000. The higher your deductible is, the less you’ll pay for car insurance premiums – but the more you’ll pay to make a claim.

If you anticipate being involved in a lot of insurance claims or accidents, then it’s best to have a lower deductible. The deductible is the amount you pay towards a car insurance claim before your insurance covers the rest. You must pay your deductible to make a claim.

However, if you want to reduce monthly insurance premiums, then you may raise your deductible. For example, a deductible of $1,000 to $2,000 could save you 5% to 15% per year on insurance premiums. If you don’t anticipate making many insurance claims, you can save money by raising your deductible. However, a single claim every few years could wipe out any cost savings.

How Deductibles Work

The deductible is an amount you are required to pay before your car insurance company covers all remaining costs of the claim.

If you crash your car into a building and cause $5,000 of damage to your vehicle, for example, then you might pay a $500 deductible, and your insurer covers the remaining $4,500 of repair expenses.

The higher your deductible is, the less you’ll pay for insurance premiums. Insurance premiums are your monthly insurance bill (although some pay their premium as a lump sum every 6 to 12 months). The lower your deductible is, the more you’ll pay for insurance premiums.

Let’s say you receive a car insurance quote for $1,800 per year with a $500 deductible, which is roughly average for drivers across the United States. You pay $150 per month in insurance premiums. If you are involved in an accident, you’ll pay a $500 deductible, and your insurance covers the remaining costs.

Let’s say you want to reduce your insurance premiums to $100 per month, or $1,200 per year. You raise your deductible to $2,500. You’ll pay $2,500 after an insurance claim, but you’re now only paying $1,200 per year for car insurance, saving you $600 per year from the original quote.

How Much Can You Save by Raising Your Deductible?

Raising your deductible can help you save money on insurance premiums. However, the amount you save varies widely based on your driving history, insurance company, state insurance laws, and other factors.

According to Forbes, the average driver in the United States with a $250 deductible pays $1,757 per year for car insurance. The average driver with a $2,000 deductible, meanwhile, pays $1,259 per year:

  • $250 Deductible: $1,757 per year
  • $500 Deductible: $1,602 per year
  • $1,000 Deductible: $1,423 per year
  • $1,500 Deductible: $1,324 per year
  • $2,000 Deductible: $1,259 per year

Insurance premium discounts vary widely between insurers. Some insurers only reduce premiums by 5% for raising your deductible, and the cost savings may not be worth it.

Contact your insurer to ask about raising your premium to save money on car insurance.

Should You Raise Your Deductible? Things to Consider

Raising your deductible to save money on car insurance seems to make sense. However, it may or may not be the right choice for you.

Some of the things to consider when raising your deductible include the following:

Chances of Making a Claim: You need to pay your comprehensive coverage deductible to repair your windshield, fix vandalism, and deal with hail damage. You pay your collision coverage deductible, meanwhile, after an accident. Think of your chances of making a claim, then decide if it’s worth making a deductible.

Chances of Being Involved in an Accident: The average driver in the United States is involved in an accident once every 17 years, according to insurance industry data. Even if you’re the world’s safest driver, you may be involved in an accident through no fault of your own. If you have previously been involved in multiple accidents, then you may have a higher chance of being involved in an accident in the future.

Chances of Anyone in Your Household Making a Claim or Being Involved in an Accident: It’s not just about your driving: it’s about anyone in your household making a claim against an insured vehicle. If you have a driver under 25 in your household, for example, that driver has a higher chance of making a claim, and it may be better to have a smaller deductible.

Savings from Insurance Company: Some insurance companies reduce premiums by 20% when you raise your deductible. Others drop premiums by less than 5%. Contact your insurer to determine how much you save by raising your deductible. It may not be worth it if you only save a few dollars annually.

Monthly Insurance Premiums: Do you want to spend $100 monthly on car insurance or $150? You may want smaller monthly insurance premiums depending on your budget and income. Raising your deductible can help you accomplish that.

Collision vs. Comprehensive Coverage Deductibles: Generally, comprehensive coverage deductibles are lower than collision coverage deductibles. Some drivers lower their comprehensive coverage deductible but keep their collision coverage deductible high. This makes it easier to make comprehensive coverage claims (say, for windshield damage or scratches from a windstorm) but costlier to make collision coverage claims (say, after a car accident where you were at fault).

Your Ability to Make a Large Cash Payment Unexpectedly: A recent study found 57% of Americans cannot afford a $1,000 emergency expense. Can you afford a deductible of $1,000 to $2,000? Do you have an emergency fund to cover this amount? Depending on your cash situation, you may want a smaller deductible for peace of mind.

Actual Insurance Premium Savings: Raising your deductible from $500 to $2,000 could save you $150 per year on car insurance, or around 10%. However, you’ll pay $1,500 more for an accident. If you get into one accident every ten years, then you’re breaking even in terms of actual money saved.

Risk Versus Reward: Ultimately, raising your deductible comes down to risk versus reward. Some drivers accept the risk in exchange for instant cost savings today. Others are willing to pay slightly higher premiums for peace of mind.

Final Word

Raising your deductible can help you save money on car insurance.

Generally, drivers who raise their deductible can save around 5% to 10% per year on car insurance. The higher your deductible is, the more you’ll save. Jumping from a $250 deductible to a $2,000 deductible, for example, can help the average driver save around $500 per year.

Contact your insurer to discover how much you can save on insurance premiums by raising your deductible today.

James Shaffer
James Shaffer James Shaffer is a writer for and a well-seasoned auto insurance industry veteran. He has a deep knowledge of insurance rules and regulations and is passionate about helping drivers save money on auto insurance. He is responsible for researching and writing about anything auto insurance-related. He holds a bachelor's degree from Bentley University and his work has been quoted by NBC News, CNN, and The Washington Post.
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