How to determine the ideal car insurance deductible for you

There are three main factors to consider when choosing car insurance deductibles: your out-of-pocket budget, your claims frequency, and your potential premium savings.

How to determine the ideal car insurance deductible for you

Car insurance’s main job is to protect you financially if you get in an accident or something else bad happens to your car. But it doesn’t always pay for everything if you file a claim. You’ve probably heard of an insurance deductible. But what are car insurance deductibles, how do they work, and how do you pick one that fits your budget? 

What are car insurance deductibles? 

When you file a claim with your car insurance, you often have to pay part of the claim’s cost out of pocket before your provider covers the rest. The amount you pay is called the deductible. Deductibles keep insurance policyholders from filing lots of small claims, so insurance companies can keep their claims volume manageable. 

Insurance companies usually deduct your deductible (you can see where it got its name!) from the payout they send you for a claim. So, when you get a claim payment, you’ll get the amount you claimed minus the cost of your deductible. 

What kind of car insurance deductibles are there? 

Only some car insurance coverages have a deductible. Of the types of coverage, here’s which usually has a deductible. 



Collision insurance 


Comprehensive insurance 


Liability insurance 


Medical payments (MedPay) insurance 


Personal injury (PIP) insurance 


Uninsured motorist bodily injury insurance 


Uninsured motorist property damage insurance 


You can choose different deductibles for different coverage types. If you anticipate filing a lot of one type of claim but almost never file another type, you could set a lower deductible for the claim type you expect to file more often. 

If you lease or finance your car, your lender usually sets minimum insurance deductible requirements as part of the terms of your loan. Be sure to consider those requirements when setting your deductible amounts. 

High vs low car insurance deductibles 

When you set up your policy, you choose a deductible for each car insurance coverage you select. Average car insurance deductibles are $500 each, but you usually have options ranging between $100 and $2,000. That’s a big range – but what does a higher deductible change about your insurance versus a lower one? 

There’s an inverse relationship between the cost of your deductible and the cost of your insurance premium. A higher-premium plan usually has lower deductibles, and a lower-premium plan usually has higher deductibles. Both options have the potential to save you money, but it depends on your finances and how many claims you file. 

How to choose your car insurance deductibles 

There are three main factors to consider when choosing car insurance deductibles: your out-of-pocket budget, your claims frequency, and your potential premium savings. 

Assess your budget 

Look at your savings and your credit limit. How much would you be comfortable paying if you got into an accident? If you don’t have a lot of funds available, you might not be able to afford to pay a higher deductible. However, if you can deal with more expensive claims, choosing a higher deductible could help you save money on your premiums. 

Take your car’s value into consideration, too. If you have a luxury or sports car that’s expensive to repair, a higher deductible will be less of an obstacle to getting it fixed. 

Think about how often you file insurance claims 

Unlike a health insurance deductible, which only resets once a year, car insurance deductibles reset every time you file a claim. So, the number of claims you file has a big effect on your overall insurance costs. 

If you’re accident-prone or live in an area where car collisions and thefts are common, having a high deductible could cost you thousands of dollars per year. On the other hand, if you don’t drive your car often and rarely get into accidents, you might never have to file a claim. If you never file claims, having a higher deductible could help you save on your premiums. 

Calculate your savings 

Compare your annual premium for different deductibles with how much those deductibles would cost if you filed a claim. After all, if a higher deductible saves you $100 a year but adds $1,000 to the cost of one claim, it’s probably not worth it. 

What if my car insurance deductible costs more than my repairs? 

If your deductible costs more than the bill to fix your car, then your insurance won’t pay you for a claim. In this situation, it’s better to avoid filing a claim. Filing claims can make your insurance company raise your premiums because they see you as more expensive to insure. So, if you have a small fender-bender that costs less than your deductible to repair, it’s in your best interest not to file a claim at all. Just pay for the repair with your own money. 

How to get help choosing your insurance deductibles 

If you’re still not confident about picking car insurance deductibles, you can always talk to an insurance agent or your insurance company’s representative. They can look at your situation and make a suggestion. Surround Insurance’s independent agents are insurance experts – drop us a line and we’ll be happy to help.

This is general information based on questions our customers ask us. It may not be right for your specific situation. You should get some advice from a licensed insurance agent (like us!) before you make a decision on your own insurance.