How does a car insurance deductible work?
Written by Marc Berry
Founder and Insurance Distribution Executive
Reviewed for accuracy by Cameron Berry
Licensed Property & Casualty Agent · NPN 20621185
Last reviewed
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Short answer: A deductible is the amount you pay out of pocket on a covered claim before insurance pays the rest. With a $500 deductible and $3,000 in covered damage, you pay $500 and your insurer covers $2,500.
Deductibles apply to collision and comprehensive claims, not to liability (which pays others). A higher deductible lowers your premium because you're absorbing more of the risk; a lower one costs more each month but less when you file. The right balance depends on how much you could comfortably cover out of pocket at any given moment.
Reviewed for accuracy by Cameron Berry
Licensed Property & Casualty Agent · NPN 20621185
Last reviewed