Your deductible is the amount you agree to pay out of pocket when you file a claim before your insurance steps in, and it’s the starting point of a negotiation with your provider about who pays, how much and when. The higher your deductible, the less you’ll pay in monthly premiums. It’s all about finding the right balance between paying more now or later. Luckily, our team of experts at Bankrate, in partnership with Quadrant Information Services, has mapped out the trade-offs so you can make the best decision for your budget and risk level.
How deductibles can impact your premiums
Typically, the higher the car insurance deductible you are willing to accept, the cheaper the premiums will be, as you will be responsible for paying more out of pocket in the event of a claim. Conversely, if you have a lower deductible, your insurer assumes more financial responsibility and will, therefore, typically charge a higher rate for coverage.
You can have your insurance agent run different scenarios to show you the differences in premium costs based on the level of deductibles chosen. To help illustrate this, the chart below shows how much deductibles for car insurance can impact your average annual premiums for full coverage:
| Comprehensive/collision deductible | Average annual full coverage premium |
|---|---|
| $100/$500 | $3,041 |
| $250/$250 | $2,908 |
| $250/$500 | $2,820 |
| $500/$500 | $2,638 |
| $500/$1,000 | $2,546 |
| $1,000/$1,000 | $2,336 |
| $1,500/$1,500 | $2,205 |
| *Average annual premiums accurate as of January 2025 |
As you can see from the table, if you’re willing to pay a higher deductible, your average cost of car insurance is less. Deductibles only apply to optional comprehensive and collision coverage. With state-mandated liability coverage, your insurer only covers damage to others, so no deductible applies. A full coverage insurance policy contains all three types of coverage, but insurance providers allow you to individually customize your deductibles for comprehensive and collision coverage.
Keep in mind that other factors can contribute to the amount of premium savings you gain or lose outside of changing your car insurance deductible. Individual rating factors like driving record, miles driven, location and claims frequency also impact your insurance premium over time — influencing how much of a bottom-line difference changing your deductible may make.
To determine the best value, ask for pricing using several deductible options from your shortlist of providers you compare for quotes. Additionally, here are a few real-world examples from Reddit and Quora that showcase how others decided whether a $1,000 deductible was the right choice for them — and potentially for you, too!
*The quotes and citations included on this page have been verified by our editorial team and are accurate as of the posting date. Outlinked content may contain views and opinions that do not reflect the views and opinions of Bankrate.
Minimum and maximum deductible limits
The table above highlights some popular deductible limits, but they can vary widely, with some as low as zero and others reaching up to $2,500. Each car insurance company offers its own range of options, and many standard auto insurers do not include a zero-deductible choice.
Options for setting a deductible may be limited, however. If you have a car loan or lease, most vehicle financing agreements require a maximum deductible for collision and comprehensive coverage — often no more than $500. This means you may be able to pick a lower amount if you prefer, but not a higher one, such as $1,000.
Bankrate insights
In almost every state in the U.S., drivers need to have a minimum amount of car insurance to drive on public roads legally. This requirement typically includes bodily injury liability and property damage liability, but not collision and comprehensive insurance. It’s important to recognize that “minimum car insurance requirements” does not refer to minimum deductible limits as liability-only coverage does not have deductibles.
How deductibles can impact your claim
If your car is damaged and you file a claim, the deductible is subtracted from the claim amount your insurer will pay (up to your coverage limit). Say your policy is written with a $1,000 deductible. A recent fender-bender led to a claim for your SUV for damage totaling $3,500. The check you would receive from your insurer to cover the repairs will be $2,500 (not factoring in depreciation).
The previous example referenced a fender-bender, which, as the name suggests, is covered under collision coverage. Collision coverage applies to accidents involving your vehicle colliding with another vehicle or stationary object, like a tree. Non-collision-related damage falls under comprehensive coverage, which includes events like hitting a deer, theft, vandalism, severe weather, cracked windshields and other incidents out of your control.
It is also important to remember that the car insurance deductible you choose applies every time you file a claim. For instance, let’s say you have a $500 deductible for both comprehensive and collision. In January, you hit a deer. You’ll have to pay a $500 deductible out of pocket before your comprehensive coverage kicks in. In March, a hailstorm causes damage to your car. Even though you’ve already made a comprehensive coverage claim and paid the $500 deductible, you still need to pay the $500 for this second claim.
When does my deductible not apply?
Sometimes, the circumstances of the accident or the type of claim can determine whether or not your deductible will apply. Here are some instances where your deductible may not apply:
- Liability-only insurance: State laws generally require you to carry a minimum amount of liability insurance, with full coverage being optional unless your lender requires it. You won’t have a deductible with liability-only insurance, but you will have to pay out-of-pocket for any repairs stemming from at-fault collisions or other damage-causing events, like hitting a deer or severe weather.
- No-fault scenarios: When you are not at fault in an accident, the other driver will generally be forced to cover your repairs through their liability insurance. In this instance, you don’t have to pay a deductible.
- Collision deductible waiver: With this optional policy feature, your insurer will waive your deductible in certain situations, such as if the accident is caused by an uninsured or underinsured driver.
- Full glass coverage: Comprehensive coverage would cover a rock hitting your windshield and cracking it, but you would be liable to pay your deductible. Since these types of incidents are so unavoidable, many insurers offer separate full glass coverage, which can cover the repair or replacement without a deductible, depending on your policy. Additionally, there are several states that prohibit insurers from applying a deductible for windshield repair or replacement under comprehensive coverage.
Pros and cons of higher deductible car insurance
As with most things, there are trade-offs to consider when altering your car insurance deductible. The consequences of your choice center on your comfort level with the ability to pay a portion of the costs of a claim vs. the premium savings you may gain from accepting more risk.
To help find the sweet spot — the ideal balance of premium and deductible expenses — here are some pros and cons to keep in mind when deciding whether to opt for higher deductible car insurance.
Pros
- Cheaper car insurance premiums: Raising the amount of your deductible has the potential to substantially reduce your insurance premiums. By doing this, you could potentially make the cost of car insurance more affordable.
- Flexibility: If you raise your deductible, it doesn’t have to be a one-time, permanent policy declaration. In most cases, you may have the freedom to choose a deductible that fits your budget, and you are free to reevaluate what your deductible is as circumstances change.
- Cash flow for other needs: Having extra money from premium savings could help pad your emergency fund for other unanticipated expenses or set aside money to cover that higher deductible before you ever need it.
Cons
- Greater financial responsibility for claims: With a higher deductible, you will pay more out of pocket for repairs as part of a covered claim, so you need to make sure that you’re able to afford the higher costs. It’s also important to note that in some cases, the amount of damage will be less than your deductible, so you’d need to cover the cost of repairs out of your own pocket.
- Limited savings depending on your situation: As in our earlier example, it helps to do the math and compare potential savings because raising a deductible will not make sense in every case. That is why it can be a good idea to consider all the variables that contribute to the cost of your car insurance and explore different deductible vs. premium options from several car insurance carriers.
- Less peace of mind: If the budget is tight and you would find it hard to pay a high sum every time a claim occurs while you wait for insurance reimbursement, having a higher deductible may not be worth the stress on your finances.
Frequently asked questions
Methodology
Bankrate utilizes Quadrant Information Services to analyze January 2025 rates for all ZIP codes and carriers in all 50 states and Washington, D.C. Rates are weighted based on the population density in each geographic region. Quoted rates are based on a single, 40-year-old male and female driver with a clean driving record, good credit and the following full coverage limits:
- $100,000 bodily injury liability per person
- $300,000 bodily injury liability per accident
- $50,000 property damage liability per accident
- $100,000 uninsured motorist bodily injury per person
- $300,000 uninsured motorist bodily injury per accident
- $500 collision deductible
- $500 comprehensive deductible
Comprehensive deductible: Rates were calculated with the following deductible amounts applied: $100, $250, $500, $1,000 and $1,500.
Collision deductible: Rates were calculated with the following deductible amounts applied: $250, $500, $1,000 and $1,500.
To determine minimum coverage limits, Bankrate used minimum coverage that meets each state’s requirements. Our base profile drivers own a 2023 Toyota Camry, commute five days a week and drive 12,000 miles annually.
These are sample rates and should only be used for comparative purposes.
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