Jane Dotson
An auto insurance deductible is an amount you pay out of pocket when filing a claim before your insurance coverage kicks in. You typically have a choice between a low and high deductible. A low deductible means a higher insurance rate, whereas a high deductible means a lower insurance rate. The deductible amount is chosen when purchasing the policy and can sometimes be adjusted during the policy term. You have to pay a deductible any time you make a claim for your car insurance, and it is separate from your premium.
| Characteristics | Values |
|---|---|
| When do you pay a car insurance deductible? | You pay a car insurance deductible every time you file a claim. |
| How do car insurance deductibles work? | You pay a deductible, then your insurance company covers the remaining cost up to the policy limit. |
| What is a car insurance deductible? | The amount of money you agree to pay out of pocket when you file an insurance claim. |
| How do you choose a deductible amount? | You should choose an amount that you are comfortable paying out of pocket. |
| How does the deductible amount impact your car insurance premium? | A low deductible amount leads to a high insurance premium, and a high deductible amount leads to a low insurance premium. |
| When do you not have to pay a deductible? | When another driver is at fault, when another driver files a claim against your liability insurance, and when you have free repairs on glass claims. |
What You'll Learn
When do you pay a deductible?
You pay a deductible when you file a claim under a coverage that carries a deductible. This means that you will pay your deductible every time you file a claim that uses a specific coverage type. For example, if you have a $500 collision insurance deductible and submit a $3,000 claim for car repairs after an accident, you will have to pay your $500 deductible upfront. Once you pay that amount, your provider will cover the remaining cost of the claim.
There are some instances in which you don't have to pay a deductible. For example, if you're in an accident caused by another driver, the at-fault driver's liability insurance will cover the damage to your car and medical expenses. Additionally, if your repairs cost less than your deductible, you may not want to file a claim as your insurance premium could increase.
It's important to note that you typically have a choice between a low and high deductible. A low deductible means a higher insurance rate, while a high deductible means a lower insurance rate. When choosing a deductible, consider your financial situation and comfort level with higher out-of-pocket costs versus monthly costs.
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How do you choose a deductible amount?
Choosing a car insurance deductible amount is a balancing act between your monthly insurance payments and the amount you can afford to pay out of pocket in the event of an accident. Here are some factors to consider when choosing a deductible amount:
- Value of your car: If your car is worth more, choosing a higher deductible may make more sense as you are likely to receive a higher payout from your insurance company in the event of an accident. Conversely, if your car is not worth much, a lower deductible may be better as the payout from the insurance company will be lower.
- Your savings: Consider how much you can afford to pay for repairs after an accident. If paying a high deductible would be a financial burden, opt for a lower deductible even if it means paying slightly higher insurance premiums.
- Cost difference: Compare quotes from different insurance companies and evaluate how different deductible amounts affect your rates. Some companies may offer similar rates for $500 and $1,000 deductibles, so it's important to shop around.
- Risk tolerance: Consider your driving history and the likelihood of filing a claim. If you have a history of accidents or frequently drive on busy roads, you may be more likely to file a claim and pay a deductible. If you are comfortable taking on financial risk, a higher deductible may be a good choice.
- Driving record: If you have a clean driving record, you may want to opt for a higher deductible to lower your insurance premiums. On the other hand, if you have a history of accidents, a lower deductible may be a better choice.
- Financial situation: Evaluate your overall financial situation and how much you can afford to pay out of pocket in the event of an accident. If you have savings or an emergency fund, you may be able to choose a higher deductible.
It's important to remember that there is no one-size-fits-all answer when choosing a deductible amount. The best deductible for you will depend on your individual circumstances and preferences. Be sure to consider all the factors mentioned above before making a decision.
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Can a deductible be waived?
Yes, a deductible can be waived under certain circumstances.
A collision deductible waiver (CDW) is an optional insurance feature that some auto insurers offer to waive your collision deductible if you have a qualifying claim. This means that if you are in an accident and it wasn't your fault, your collision coverage will still cover the damage to your vehicle, but you won't have to pay your deductible.
However, there are some important restrictions to note. Firstly, collision deductible waivers are not widely available, and even if your insurer offers them, they may only be available in certain states. For example, Progressive only offers CDWs in California and Massachusetts. Secondly, in some states, the driver must be uninsured for the CDW to apply, and the accident must be caused by an identifiable driver. If the driver is unidentified, such as in a hit-and-run accident, the waiver will not apply. Additionally, you must be entirely not at fault for the accident to qualify for a CDW.
Another instance where a deductible may be waived is if you have full glass coverage as part of your comprehensive car insurance. Some insurers may waive your deductible if you need to repair or replace your windshield.
It's important to note that adding a CDW to your policy will likely result in a higher premium. While it can provide financial protection in the event of an accident with an uninsured driver, it doesn't offer any new coverage, only eliminating the deductible in certain circumstances.
In the context of health insurance, a waived deductible may indicate that a service is already free or low-cost under your plan, such as preventive services like an annual wellness visit.
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What is deductible recovery?
Deductible recovery is a process that allows you to get reimbursed for your deductible, which is the amount you pay out of pocket when filing an insurance claim before your insurance coverage kicks in. This typically applies to collision coverage, which protects you in an accident that is not your fault, as well as comprehensive coverage and sometimes uninsured or underinsured coverage.
When you file a claim with your insurance company and pay your deductible, they will cover the remaining costs for damages. If it is determined that you were not at fault for the accident, your insurance company will work to recover your deductible through a process called subrogation. Subrogation is when your insurance company seeks reimbursement from the at-fault driver's insurance company, so that you can get your deductible back.
The deductible recovery process time can vary depending on the circumstances of the accident, but on average it can take about six months to recover your deductible. If both sides are cooperative and provide the necessary information, you may get your deductible money back in as little as one to two weeks.
It's important to note that deductible recovery is not always guaranteed, and there may be instances where you won't be reimbursed for your deductible. Additionally, the time it takes to recover your deductible can vary depending on the insurance companies involved and the complexity of the claim.
To increase your chances of successful deductible recovery, it's recommended to have all the necessary information readily available, such as a police report, pictures, and other important details related to the accident.
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What is a good deductible?
When it comes to auto insurance, a deductible is the amount of money you pay out of pocket when you file a claim before your insurance coverage kicks in. Deductibles typically range from $100 to $2,000, with $500 being the most common choice. You can usually choose between a low and high deductible. A low deductible means a higher insurance rate, while a high deductible means a lower insurance rate.
So, what is a good deductible? This depends on your financial situation and your tolerance for small dings and scratches. If you have an emergency fund and can afford to pay more for repairs, a higher deductible can lower your insurance premiums. However, if you prefer to pay less out of pocket, a lower deductible is a better option, even though it will result in higher insurance rates.
It's important to consider your driving history and the likelihood of filing a claim. If you've had accidents in the past or frequently drive on busy roads, you may be more likely to file a claim and pay a deductible. Additionally, if you live in an area where cracked windshields are common, choosing a low deductible for windshield replacements may be wise.
Ultimately, the best deductible is one that you are comfortable with and can afford to pay in the event of a claim.
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Frequently asked questions
An auto insurance deductible is the amount you pay out of pocket on a claim before your insurance covers the rest.
You pay your deductible any time you make a claim for your car insurance.
Auto insurance deductibles typically range from \$100 to \$2,000, with \$500 being the most common amount chosen by drivers.
Yes, you can usually choose your deductible amount for each coverage. A lower deductible means a higher insurance rate, while a higher deductible means a lower insurance rate.
In some cases, your auto insurance deductible may be waived. For example, if you have comprehensive coverage and are making a claim to repair windshield glass damage, your deductible may be waived.
