If you are looking for cheap car insurance, you’ve likely seen the word “deductible” come up numerous times. Here is everything you need to know about how deductibles work, which coverages actually require them, and how to choose the right amount for your budget.
How a Car Insurance Deductible Works
A deductible is the amount of money you agree to pay out of pocket toward repairs before your insurance company covers the rest of the claim. For example, if you have a $500 deductible and you get into an accident that causes $2,500 in damage to your car:
- You pay: The first $500.
- Insurance pays: The remaining $2,000.
It is important to remember that a deductible is per claim, not per year. If you have two separate incidents in one year, you will be responsible for the deductible both times.
Which Coverages Have Deductibles?
You can be insured without having a deductible. If you are looking for the absolute cheapest way to stay legal, you might choose a policy that doesn’t have one at all. Both policies with no deductibles and policies with large deductibles are viable. You must select one according to your needs.
Liability Insurance
Liability insurance, which covers the state minimum requirements, typically has a $0 deductible. This is because liability insurance is designed to pay for the damage you cause to other people, not your own car. This is why “State Minimum” policies are the most affordable option for drivers on a tight budget or those who simply need to file an SR-22.
Collision and Comprehensive Coverage
If you want coverage for your own vehicle, you will need to add Collision or Comprehensive coverage. Collision covers you if you hit another car or an object, while Comprehensive covers things out of your control, such as theft, fire, vandalism, or a cracked windshield. Because these coverages pay for repairs to your vehicle, they almost always carry a deductible.
How Your Deductible Affects Your Monthly Bill
A higher deductible requires you to pay more out of pocket if you’re involved in an accident. Because you are taking on more of the risk, the insurance company rewards you with a lower monthly payment. This is the most popular choice for drivers who need the cheapest possible rate to get back on the road or stay compliant with an SR-22.
On the flip side, if you prefer a lower deductible, the insurance company carries more of the risk, so your monthly payment will be higher. This works well if you would rather pay a little more each month to avoid a large, unexpected bill later. Ultimately, you can adjust these numbers to find the perfect balance between what you can afford today and what you can afford in an emergency.
Frequently Asked Questions
Do I pay a deductible if the accident wasn’t my fault?
Generally, no, you don’t pay a deductible if the accident wasn’t your fault. If the other driver is 100% at fault, their liability insurance should pay for your repairs from the first dollar.
Can I change my deductible?
Yes, you can change your deductible. If your financial situation changes, you can usually call your agent and adjust your deductible to either save money on your monthly bill or decrease your out-of-pocket risk.
What if I need an SR-22?
If you only need an SR-22 to get your license back and choose a “Liability Only” policy, you likely won’t have to worry about a deductible.
Get Back on the Road with Accurate Auto Insurance
At Accurate Auto Insurance, we specialize in helping drivers who have been turned away elsewhere. Whether you have a less-than-perfect driving record, poor credit, or just need the cheapest state minimum coverage to get back behind the wheel, we’ve got you covered.
Don’t let insurance jargon slow you down. Get a free quote in under a minute. No credit check required! Call us or get a quote online today!
