Car Insurance Deductibles

What is a car insurance deductible?

The car insurance deductible is the portion of the claim amount the insured is responsible for paying. When you buy or make changes to your policy, you can set that amount along with your coverage limits.

How do car insurance deductibles work?

When you buy your auto policy, you get to set your deductible along with your coverage limits. If you have an accident that's covered under your policy, you'll be responsible for your deductible amount . The insurance company will pay the claim amount less the deductible.

For example, you have an accident that will cost $2,000 in repairs to your vehicle. If your deductible is $500, you’ll pay that amount out of pocket. Your insurance company will cover the remaining $1,500.

If the cost of repairs is less than your deductible, you should not file a claim. Your insurance company won’t pay for any repairs below the deductible. Moreover, filing a claim can cause your insurance premium to rise.

For example, you have an accident with repair costs totaling $400. With a $500 deductible, filing a claim wouldn’t make sense. You’d end up paying the entire cost yourself, and in this example your insurance provider would not contribute.

Your auto insurance deductible is different than a health insurance deductible. There’s no annual maximum amount to meet. Instead, your deductible will apply each time you file a claim.

What are some common deductible options?

While amounts vary by insurer, common options are $250, $500 or $1,000. Comprehensive deductibles are usually $100, $250 and $500, though a $0 deductible option may exist. These amounts are available as options here at American Family Insurance.

Choosing Low Deductibles vs High Deductibles

With a range of options available, how do you choose the best one for you? The following sections will help you to choose between higher and lower deductibles.

Lower Auto Insurance Deductibles

• Pay less out of pocket if you file a claim
• Pay more in premiums

Higher Auto Insurance Deductibles

• Pay more out of pocket if you file a claim
• Pay less in premiums

Auto Deductibles: Example Scenarios

Low Deductible Scenario

Scenario: A tree branch dented your car hood during a thunderstorm, and it’ll cost $1,500 to repair. You chose comprehensive coverage with a low deductible of $250.

Filing a claim makes sense here because you've been paying higher premiums for a low deductible. You’ll only pay $250 out of pocket for the damage. Your insurance company would cover the remaining $1,250.

High Deductible Scenario

Scenario: You hit a tree with your car, and fixing the damage will cost $1,500. You selected a lower monthly premium with a deductible of $1,500.

In this instance, your deductible is the same as the repairs. It wouldn’t make sense to file a claim.

Deductibles with American Family Insurance

American Family Insurance makes it easy to set up your car insurance policy and choose a deductible:

1. Get an auto insurance quote and buy coverage. It's as easy as contacting your agent or calling 1-800-MYAMFAM (1-800-692-6326).
2. Have your information ready. When quoting auto insurance, you’ll need the names, addresses, dates of birth, numbers of accidents/violations for all drivers in your household and current insurance policies.
3. Select a deductible that works best for your budget. Along with your coverage limits, you can set the amount when setting up your car insurance. What’s best for you depends on your individual financial needs.

This article is for informational purposes only and includes information widely available through different sources. This article does not afford, offer, or guarantee any coverage.