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When Do You Pay The Deductible For Car Insurance?

When you purchase an auto insurance policy, you often see a deductible listed with your comprehensive and collision coverages.  A deductible is the amount that you must pay as a policyholder before your auto insurance company will cover a claim for comprehensive or collision damages.  Deductibles can also apply to Medical Payments and Uninsured/ Underinsured Motorist Coverage. Deductibles can range from $0 to $1000 or more. If you are in an accident or your vehicle suffers damage, you pay the deductible amount before your auto insurance company pays up to your coverage limits.

So, in short, you must pay your car insurance deductible when you file a claim for comprehensive or collision damages, or medical payments coverage, or uninsured motorist coverage, both property damage and bodily injury.

What does Car Insurance Deductible Mean?

Both your comprehensive and collision coverages normally include a deductible.  You can try getting an auto insurance policy with a $0 deductible; however, you may not be offered this policy, and if you are, it is generally more expensive.  Having a higher deductible can help save on your auto insurance premium; however, if you are in an accident or your car is otherwise damaged, the deductible is the amount that you must pay before the insurance company will pay any money to repair your car. For instance, if you have a $250 deductible on comprehensive coverage and your car suffers $2000 worth of damage due to an act of nature, you must pay the $250 out of pocket before the auto insurance company pays the other $1750 if you file a claim.

More about Deductible:

Do You Pay Your Collision Deductible When You Are Not At-Fault In An Accident?

You should already understand that you need to pay the deductible for collision on your auto insurance policy to get your car repaired in an accident in which you are at fault.  Collision coverage covers the repairs to your vehicle when you are in an accident that you caused.

You may need to pay your collision deductible even if the other driver is at fault in the accident.  This is true even if the other driver has sufficient coverage. The at-fault driver’s liability coverage is supposed to cover your damages; however, it can take the other driver’s insurance company weeks or more to pay on your claim.  During this time, you need to get your vehicle repaired and back to driving condition. 

In order to pay for the repairs, you may want to file a collision claim with your own insurance company to cover the cost of repair and let your insurance company recoup the money from the other insurance company.  In this instance, you have to pay the collision deductible before your insurance company pays the rest. Your insurance company recoups the money on the claim through a process that is known as subrogation. Once your insurance company receives the money from the other insurance company, you should get your deductible back.

How Often Must You Pay The Deductible?

Your deductible does not just apply to your first accident or damage claim.   Most auto insurance companies require that you pay the deductible amount every time that you file a claim on your insurance policy.  This means that you don’t simply pay up to the deductible once a year and the insurance company pays the rest. You must pay the deductible amount for every accident or damage claim per year.

How To Choose A Deductible That Is Right For You?

Because you have to pay the deductible to repair your car if you are in an accident or your car is otherwise damaged, you should choose a deductible that you are sure that you can afford.  Higher deductible amounts generally save you money on your auto insurance premium, whereas policies with lower deductible amounts can be more expensive. Therefore, you must balance your ability to pay your auto insurance premium with your ability to pay your deductible if you need to use your coverage. 

If your auto insurance company gives you the option to make monthly payments on your premium, it may be wise to choose this option with a lower deductible to ensure that you can afford to get your car repaired in the event that it gets damaged.

Can You Reduce Your Insurance Deductible?

The good news is yes, you can. Some auto insurance companies offer vanishing deductibles policy add-on, which helps reduce your deductible over time for staying claim free.  This helps you pay less out of pocket if you ever need to file a claim.

For instance, Nationwide has a vanishing deductible program that lowers your deductible by $100 for every year of safe driving up to $500.  This saves you a lot of money out of pocket. Other auto insurance companies that have similar programs include AllState’s Deductible Rewards Program, The Hartford has a Disappearing Deductible Program, and Liberty Mutual has a Deductible Fund.  If you are insured by one of these companies, you pay a lower deductible for each year of safe driving that you accumulate.

Final Thoughts

Your deductible amount generally applies to comprehensive and collision coverage and is the amount that you must pay out of pocket when you file a claim with your insurance company.  Because it takes another driver’s auto insurance company longer to pay out on your claim than your own, you may end up paying your collision deductible even when the other driver is at fault in an accident.  You can get your deductible back through the process of subrogation; however, if you want your car fixed in a timely manner, be prepared to pay the deductible. Therefore, you should always make sure that you choose a deductible that you can afford.

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