The car insurance deductible is the amount you pay before your insurer covers the rest. What happens if your car insurance deductible is too expensive? How can you avoid paying your car insurance deductible?
Today, we’re explaining everything you need to know about car insurance deductibles and how they work, including options if you are unable to pay your deductible.
How Do Car Insurance Deductibles Work?
You’re involved in a car accident. You file a claim with your insurance company to cover the damage to your vehicle. When you file a car insurance claim, you need to pay a deductible before your insurance company covers the remaining costs.
Let’s say your vehicle has $5,000 worth of damage and you have a $1,000 deductible. Your insurance company will send you a check for $4,000 to cover the damage to your vehicle minus the deductible.
In other words, you don’t technically “pay” your deductible: with most claims, the deductible amount is subtracted from your payout.
Which Types of Car Insurance Coverage Have Deductibles?
The most common coverages with deductibles include comprehensive and collision coverage.
Collision coverage is the car insurance that covers damage after an accident. If you collide with another driver, for example, and the accident is your fault, then you will pay your collision coverage deductible and your insurer will cover the cost of repairing your vehicle. A typical collision coverage deductible is anywhere from $500 to $1,500.
Comprehensive coverage, meanwhile, covers non-accident-related damages, including theft, vandalism, environmental damage, and more. If someone steals your $20,000 car, for example, and you have a deductible of $500, then your insurance company will send you a check for $19,500 to cover the value of your stolen car minus the deductible. Typically, comprehensive coverage deductibles are lower than collision deductibles and range from $250 to $1,000.
What Happens If I Can’t Pay My Deductible?
If you can’t pay your deductible, then you cannot make an insurance claim.
If your car is driveable, then you may not need to report the accident right away. If your car only has minor exterior damage, for example, then you might want to wait a week to report the claim to your insurance company. This is generally not recommended, as the insurance company could grow suspicious and deny your claim. However, if finances are tight, then delaying could be an option.
Otherwise, the only way to avoid paying a deductible is to cancel your insurance claim.
Not All Insurance Policies Require Upfront Deductible Payments
With many insurance policies, you don’t technically “pay” your deductible at all. Your deductible is just “deducted” from your insurance payout.
If it’s going to cost $10,000 to replace your vehicle, for example, and your deductible is $1,000, then your insurance company will simply send you a check for $9,000.
With other insurance policies, you may have to pay your deductible upfront. You pay your deductible out of pocket directly to the repair shop, mechanic, or insurance company. Once you have paid the deductible, the car insurance company will take over.
Read the terms of your insurance policy to make sure you understand how your deductible works.
You May Not Have to Pay Your Deductible in Certain Situations
There are certain situations where you don’t have to pay a deductible, including:
An Insured Driver Hits You and Is At Fault
If the other driver is found officially at fault for the accident, then the other driver’s insurance company will pay for your repairs and you will not have to pay your deductible.
Alternatively, in this situation, some drivers go through their own insurance company and pay their own deductible. Then, your insurance company will seek reimbursement (including reimbursement for the deductible) from the other driver’s insurance company.
In situations where the fault is shared, you could end up paying all of your deductible or only a part of it.
Another Person Files a Claim Against your Liability Coverage
There are no deductibles for liability coverage. If you hit another driver, then the other driver may be able to file a claim against your liability coverage. Neither you nor the other driver is required to pay a deductible when making a claim under your liability coverage.
You Chose a Zero Deductible Policy
Some states and some insurance companies allow you to have a $0 deductible policy on your comprehensive coverage. If you elected to have a $0 deductible policy, then you will not need to pay your deductible.
You’re Making a Glass Repair Claim and Have Zero Deductible Glass Repairs
Some insurance policies come with free glass repairs. Glass repair costs rarely exceed a typical deductible amount, which is why many insurers do not require a deductible for glass repair claims.
Your Deductible Should Be an Amount You Can Afford
Car insurance companies let you adjust your deductible based on your budget. If you live paycheck to paycheck and have a small emergency savings account, for example, then you might set your deductible as low as possible – say, $250 to $500. You’ll pay higher insurance premiums each month but have a lower deductible for any claims.
Alternatively, if you have more financial flexibility, then you might be comfortable with a larger deductible. You might set your deductible at $1,500 to $2,000, for example, and pay less each month for insurance premiums.
You don’t need to pay your deductible in certain situations – say, if an insured driver hits you and you are at fault. Some insurance companies also do not require upfront deductible payments: they simply deduct your deductible from your total payout.
Otherwise, there’s no real way to avoid paying your deductible unless you want to cancel your claim.
Consider your financial situation and compare car insurance quotes online to ensure you have a deductible you can afford.