How do you lower your car insurance deductible?

Your car insurance deductible is an important component of your coverage. It determines how much you’ll pay out of pocket each time you file a claim, and it significantly impacts your rates. You can find your car insurance deductible on your proof of insurance card, declarations page, and policy documents. Lowering it will reduce what you have to pay after an accident, so you may wonder if you can reduce your deductible whenever you want.

The good news is that it’s relatively easy to lower your deductible. But you should find out how it will affect your rates first. Read on to find out more about how to lower car insurance deductibles.

(Read more: Is car insurance tax deductible?)

Can I lower my car insurance deductible?

Yes, you can typically lower your deductible whenever you want (though it will only affect claims for future accidents). Simply call your insurance company and tell a representative you’d like a lower deductible. However, before you do, it’s vital to know how lowering your car insurance deductible affects your insurance rates. 

Essentially, your deductible is inversely proportional to your rates, so lowering your deductible will increase your rates and vice versa. Choosing the ideal deductible is about balancing your budget’s flexibility. If you don’t have a lot of extra cash on hand, you may be better off setting a lower deductible and higher rates to avoid paying hefty repair bills out of pocket.

What is a car insurance deductible?

A car insurance deductible is an amount of money you pay on a claim before your insurance company covers the remaining amount. Typically, the deductible amount for vehicle insurance is a flat amount or a set percentage. 

Here’s how a car insurance deductible works: 

• Say your vehicle is damaged by a hail storm and needs to be repaired. 
• If you have comprehensive car insurance coverage, you can file a claim for the repair costs. 
• However, before your insurer pays for the expenses, your deductible amount is subtracted from your claim payment.

This is part of the agreement you make with your insurance company when you buy an insurance policy. You choose your deductible amount, and you may be able to adjust it, depending on the policy type and insurer. However, the change won’t apply to any existing claims. 

It will also increase your rates by 15% to 40%, depending on the policy and how big an adjustment you make. Depending on where you live and your insurer, deductible options can range from $100 to $1,000 and higher, as auto insurance by city differs greatly. The most common deductible amount is $500.

How Your Auto Insurance Deductible Works

With auto insurance, unlike health insurance, your deductible applies every time you file a claim. Once you’ve paid the deductible, your insurer covers the remaining cost of repairing or replacing your car. 

For instance, if you have a $1,000 deductible and $4,000 in damage from an accident, your insurer will pay $3,000 for the claim (if it’s a covered loss).

There are several types of car insurance deductibles, and not every kind of coverage has one. The most common types of car insurance coverage that include deductibles are comprehensive and collision insurance: 

• Comprehensive car insurance coverage covers damages done to your car by non-collision events such as vandalism, theft, and animal accidents.
• Collision car insurance coverage covers any damages to your vehicle when you hit an object, such as a utility pole or another vehicle.

Regardless of whether you get collision and/or comprehensive coverage, you choose your deductible based on what you can afford to pay out of pocket in an accident and per month in premiums.

If someone else causes a car accident, will my car insurance deductible apply?

If someone else causes an accident, their insurance company will cover the cost of repairs, and you won’t have to make an out-of-pocket payment. The driver at fault will also not pay a deductible to cover the repairs or medical care. That’s because these claims would fall under their liability car insurance, which doesn’t include a deductible.

The Bottom Line on How to Lower Your Car Insurance Deductible

You can lower your car insurance deductible, but it’s crucial to weigh the costs before you do it. Lowering your car insurance deductible will result in higher rates since the insurance company will assume more of the cost for a claim. When you decide on your deductible, it’s important to consider what you can afford — both in terms of monthly rates and what you’ll pay out of pocket after an accident.

Case Studies: Lowering Your Car Insurance Deductible

Case Study 1: Policy Review and Adjustment

John wants to lower his car insurance deductible to reduce his financial burden in the event of a claim. He reviews his current insurance policy and contacts his insurance provider to discuss his options. John learns that by increasing his premium slightly, he can lower his deductible significantly. After evaluating the potential savings and considering his budget, he decides to make the adjustment to his policy.

Case Study 2: Safe Driving and Discount Programs

Sarah has a clean driving record and wants to lower her car insurance deductible. She contacts her insurance provider to inquire about any safe driving programs or discounts available. Sarah discovers that her insurance company offers a safe driving program that rewards customers with a lower deductible for maintaining a good driving record.

She enrolls in the program and commits to safe driving practices, resulting in a reduced deductible over time.

Case Study 3: Policy Bundling

Mike has car insurance with one company and home insurance with another. He contacts his car insurance provider to inquire about potential savings through policy bundling. Mike learns that by transferring his home insurance policy to the same company, he qualifies for a multi-policy discount that includes a lower car insurance deductible.

He decides to consolidate his policies and enjoy the benefits of a reduced deductible.

Case Study 4: Increased Deductible Awareness

Samantha wants to lower her car insurance deductible but is unsure how to proceed. She contacts her insurance provider and requests information about the available deductible options.

Samantha learns that she can voluntarily increase her deductible to obtain a lower premium and lower overall insurance costs. After carefully evaluating her financial situation and risk tolerance, she decides to opt for a higher deductible to achieve her desired reduction in premium.