What is an auto insurance deductible? How do auto insurance deductibles work?

What is a deductible in car insurance? An auto insurance deductible is your portion of the repair amount you’re required to pay, before your auto insurance company covers their portion. Here’s a basic example to make things clear. You get into an accident that results in repair costs of $4,500 to your vehicle, the deductible on your policy is $500, you pay $500 and the insurance company pays $4,000 towards the $4,500 that’s required to fix your vehicle.

Do I pay my deductible before or after my car is fixed?

For example if the person working on your car bills you $5,000 in repairs, your deductible is $500 (that’s your portion), the insurance company will issue a check for $4,500 to cover their portion of the costs for the repairs. Now the next part is different per insurance company, sometimes the insurance company will payout the mechanic, and there are other situations where they will cut you the check. 

Average car insurance deductible

On average auto insurance deductibles are around $500. Please always keep in mind that your deductible influences your car insurance rates significantly. The higher your deductible, the lower your rate. The lower your deductible, the higher your rate will be. 

In conclusion, you may be asking yourself, how can I avoid paying for my auto insurance deductible? You can choose not to file a claim until you have the money in hand to pay for the repairs yourself. Or you can get a loan to pay for the costs your mechanic is billing you. 

How do auto insurance deductibles work?

Auto insurance deductibles work in a similar way to all coverage types. You are able to choose what your deductible amount will be. Let’s say you choose a $400 deductible for your comprehensive auto insurance coverage, where the premium costs are lower. Then moving on to collision you choose a $1,200 deductible due to the premium costs trending on the higher end for these car insurance products. 

The auto insurance deductible is the amount you pay towards the repairs of your vehicle before the insurance company covers the rest. Knowing how a deductible works is important to know in case you’re ever involved in an accident. 

You want to make sure when you choose your deductible that you pick an amount you can afford. Opting to go with the lower payment to save money now can come back to bite you later if you are involved in accident. 

What car insurance coverage types do or do not apply a deductible?

Not all auto insurance coverages apply a deductible. Liability auto insurance, which is required in most states by law almost never uses a deductible. Liability auto insurance coverage will cover you if you have caused damage to another person or their vehicle.

Collision car insurance & comprehensive auto insurance are very common insurance coverage types and they both use deductibles. Collision car insurance is going to cover your vehicle in case of an accident, regardless of whom may be at fault. Comprehensive auto insurance will cover damage from events you can not control, for example fires, falling objects, vandalism, floods etc. 

Personal injury protection (PIP) or uninsured / underinsured motorists coverage can carry deductibles. PIP’s are designed to cover medical expenses for you and any passengers involved in the accident. Personal injury protection is a requirement for some states. With uninsured motorist coverage you are protected in case you’re hit by a driver who does not carry insurance coverage, or if the other driver doesn’t have adequate insurance coverage to cover the damage. 

How much does a deductible affect my monthly auto insurance premiums?

Below are averages. For exact figures please contact an agent. [click here to contact an agent]

If you increase your deductible you lower your auto insurance premium. When looking at the averages we notice there isn’t much of a difference when going from a $1,000 deductible to a $2,000 deductible. Roughly only 6% will be saved at this point. The extra $5 a month you save may not be worth having to pay an extra $1,000 in deductible cost. 

Where the additional jump in deductible cost makes the most sense, is when going from a $500 deductible to a $1,000 deductible. At this point you would save on average $40 per month. Within the first year of coverage you will have saved $480 ($40 x 12 months), almost half of the deductible cost. If you are a safe driver with very few or zero claims this is an option that may work for your lifestyle. The longer you drive without filing a claim, the more advantageous the higher deductible route is. 

At the end of the day you know your driving patterns best. So picking the right amount of coverage, deductible amount and monthly premium should be based off your lifestyle and what you believe is best for your situation. If you are prone to accidents you may want to look into a lower deductible. If you have not been involved in an accident or do not drive very often, then going with a higher deductible and a lower monthly premium may work better for you.

If you want to avoid paying auto insurance deductibles

If you have been involved in an accident and are deemed to be at fault, more than likely there isn’t much you’re going to be able to do to get out of paying for your auto insurance deductible. You have the option of asking the mechanic to bill the insurance company directly, subtracting the cost of the deductible. From there you can set up a payment plan for the balance. Please keep in mind that your auto mechanic can keep your vehicle until your debt is satisfied.

You can request that your mechanic bill the insurance carrier directly and waive the insurance deductible, as a way of earning your business. Auto repair costs can be high, so there is always the chance your mechanic may eat the deductible in order to win your business. Please keep in mind, this is not a likely scenario and it is illegal for a mechanic to overcharge the insurance company in order to cover the deductible. 

Will my insurance company subtract my deductible from the mechanics fee?

One reason you may be unlikely to avoid paying your deductible is most auto insurance carriers will remove the deductible from the cost of your claim. For example if the bill from your mechanic is $2,000 for repairs and your deductible is $500, the insurance company will issue a check to the mechanic for $1,500 to cover the work needed. 

The way insurance companies deliver the funds is on an insurance company to insurance company basis. Some insurers will issue a check directly to the mechanic, others will issue the check directly to you, so you can take care of the repair cost on your own. Regardless of the route your insurance company takes, they will for sure subtract the deductible from the payout amount before processing your claim. 

What if I am not at fault, do I have to pay a deductible? 

For the most part, you will not have to pay for a deductible if another insured driver is at fault in the accident. In this situation it is common for the other insured drivers liability insurance to cover the repairs from the accident. When you are covered with collision coverage you have the option to go through your insurer to fix the vehicle. In this case you will more than likely not pay a deductible. Your insurance carrier will request full reimbursement from the at fault drivers insurance company.

Please keep in mind, if you have damages that exceed the amount of coverage set in the other drivers policy limits and choose to go with your insurance company as secondary coverage, there’s a good chance a deductible will apply. 

Let’s say another person files a claim against you, in this situation your liability insurance will cover the cost to fix the vehicle. Often you will not pay a deductible to cover the damages to the other parties vehicle. Although, you will have to pay a deductible to cover the repairs of your vehicle if you are at fault in the accident. Expect to pay all or a portion of your deductible when fault is shared in an accident. There’s also a good chance you will have to pay for any damages that exceed your policy limits as well. 

Auto insurance deductible review;

Your deductible is what you are going to pay out-of-pocket before the insurance company pays the balance of the claim.If your deductible is $100 and the claim amount is $1,000, your insurer will pay $900 of the claim amount, leaving you to pay your $100 deductible. The insurance company more than likely will not pay for costs that are less than your deductible. 

You have the option to choose your deductible amount. Please be responsible in choosing your deductible amount. Pick the deductible that will best fit your lifestyle. You know yourself best, do what’s best for your personal situation. 

Who is at fault during an accident matters when it comes to paying a deductible. It is very common that you will not have to pay your deductible if you are not at fault in an accident. There is always a good chance you will have to pay for some sort of deductible if there is shared fault in the accident. 

More than likely you are not going to get around paying for your deductible after you’ve been involved in an accident. If you are unable to pay for your deductible you can always ask the mechanic for a payment plan.

Wrapping up;

When you and one of our wonderful agents at Eugene C Yates Insurance Agency are going over your auto insurance policy, compare deductibles. Play around with the numbers until you find what you think will be best for your lifestyle. Always keep in mind, the higher your deductible is, the lower your insurance premium will be. The flip side of course being, the lower your deductible is, the higher your auto insurance premium will be.