How Does an Auto Insurance Deductible Work? 

What exactly is an auto insurance deductible, and how does it impact your coverage?

If you’re a car owner, you’ve likely encountered the term “deductible” in your auto insurance policy. Here’s some more information about auto insurance deductibles.

What is an Auto Insurance Deductible?

A deductible is the predetermined amount of money you agree to pay out of pocket before your insurance coverage kicks in to help cover a claim—it’s the initial financial responsibility you bear when you file a claim.

Some types of coverage may require a deductible payment when making a claim, including the following:

• Collision coverage may pay for damage to your vehicle resulting from a collision with another car or object (e.g., a tree, pole or guardrail).
• Comprehensive coverage may help pay for damage to your vehicle after non-collision incidents, such as theft, vandalism, fire, natural disasters and hitting an animal.

Your auto insurance agent can help review your policy and ensure you fully understand which claims may have a deductible.

Auto Liability Claims and Deductibles

Auto liability insurance may help cover damage you cause to others in an accident. It does not provide coverage for your vehicle. When you file a liability claim, you do not pay any out-of-pocket deductible for the other party’s losses.

When you’re liable for an accident, your insurance company pays the other party directly, up to the policy limits.

If you want coverage for damage to your own vehicle, you’ll need collision or comprehensive insurance.

Selecting Your Auto Insurance Deductible

When you purchase auto insurance, you’ll choose a deductible amount. Standard deductible options range from $100 to $2,000. Many drivers opt for a $500 deductible, balancing affordability and potential out-of-pocket costs.

Choosing a higher deductible (e.g., $1,000) may help lower your premium because you assume more financial responsibility. While opting for a lower deductible (e.g., $250) increases your premium because the insurer bears more risk.

When choosing your deductible, consider your ability to pay the deductible in case of an accident. If you have substantial emergency savings, a higher deductible may be manageable.

Assess your comfort level when it comes to assuming more risk, as well. Some drivers prefer lower deductibles for peace of mind.

Contact Us

Contact Pacelli Insurance in Saint Marys, Pennsylvania, to learn more about your auto insurance deductible options and get a personalized car insurance quote.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.