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Why You Can Trust the MarketWatch Guides Team
Here’s a breakdown of how we reviewed and rated the top auto insurance providers
130
Providers ReviewedOur team looked at over 100 of the top auto insurance providers in the U.S., from national providers like USAA, Travelers and State Farm to regional providers like Erie Insurance.
8,500
Data Points AnalyzedTo properly score each auto insurance provider, we looked at cost data, claims processes, customer review scores, industry standing, available discounts, coverages and add-ons.
800
Research HoursOur team put in the time so you don’t have to, evaluating cost data, reading customer reviews and researching companies to determine the most reliable options for coverage.
8,500
Customers SurveyedWe asked thousands of customers to describe their experience with their auto insurance provider to understand how real customers feel about their insurers.
Learn more about our methodology and editorial guidelines.
What Is an Auto Insurance Deductible?
A car insurance deductible is the amount of money you’re required to pay out of pocket before your insurance company covers the cost of car repairs or medical bills that stem from a car accident. You pay the deductible directly to the repair shop that’s fixing your car or the medical facility handling your treatment.
To give an example, let’s imagine you have a $500 deductible and you’ve filed a claim that requires $2,500 in car repairs. You’ll need to pay the mechanic $500 before your insurer will cover the remaining $2,000 in repair costs. If your repair costs are lower than your deductible, you’ll have to pay the full amount yourself.
Health Insurance Deductible vs. Car Insurance Deductible
Car insurance deductibles operate differently than health insurance deductibles. Unlike those for auto coverage, health insurance deductibles reset each plan year. Your out-of-pocket costs for health care accumulate during the plan year, chipping away at the amount of the deductible. Once you’ve hit your deductible, your health insurance company begins to pay for medical expenses. That deductible amount resets once the policy renews.
You pay a car insurance deductible every time you file a claim that requires it. Your out-of-pocket expenses don’t accrue over time. Additionally, different types of insurance require different deductibles.
How Do Car Insurance Deductibles Work?
In most cases, you’ll be able to choose a deductible when purchasing a car insurance policy. The deductible amount will affect your insurance premium. If you choose a higher deductible, you’ll pay a lower premium. A low deductible amount usually means you’ll pay a higher premium.
There are factors you should consider when choosing a deductible amount. If you live in a city with statistically high rates of theft or an area that experiences a lot of inclement weather, you may want to opt for a lower comprehensive deductible since that type of coverage handles theft and things like flood damage. To offset the increase in your premium, you could then choose a higher collision deductible.
How Much Is a Car Insurance Deductible?
The most popular car insurance deductible is $500, but they can range from $0 to $2,000. Most insurers set the default deductible at $500, but it’s common to see $250, $1,000 or $2,000 deductibles.
Vanishing Deductibles
A vanishing deductible, sometimes referred to as a “disappearing” or “diminishing” deductible, is an incentive some insurance companies offer to reward people for their safe driving habits. With these programs, your deductible decreases — or vanishes — the longer you go without a traffic violation or car accident.
How Does a Vanishing Deductible Work?
A vanishing deductible is essentially a credit that’s applied to your deductible each year you go without an accident or driving offense. Every year you renew your policy, that credit gets applied to your deductible, reducing it. If you go long enough without an incident or lapse in your coverage, you could end up with a $0 deductible.
Some of the largest insurers that offer vanishing deductible programs include:
- Allstate
- Nationwide
- Progressive
- Travelers
What Types of Car Insurance Have Deductibles?
There are six standard types of coverage that are common in a full-coverage auto insurance policy:
- Liability insurance
- Collision insurance
- Comprehensive insurance
- Personal injury protection (PIP)
- Medical payments coverage (MedPay)
- Underinsured/uninsured motorist coverage (UM/UIM)
Some types of coverage require deductibles, while others don’t. Liability coverage, for example, doesn’t cover your medical bills or repairs to your vehicle, so liability policies don’t have deductibles. Each state has its own insurance regulations, so some states may not require a deductible for certain types of coverage.
| Type of Coverage | Coverage Details | Does It Have a Deductible? |
|---|---|---|
| Bodily injury liability (BI) | Covers another party’s medical bills if you’re found at fault for an accident | No |
| Property damage liability (PD) | Covers damage to another party’s vehicle or other property if you’re found at fault for an accident | No |
| Collision coverage | Covers collision-related damages to your vehicle regardless of who’s at fault | Yes |
| Comprehensive coverage | Covers damages to your vehicle from non-collision events like theft, vandalism, fire and natural disasters | Yes |
| Medical payments coverage (MedPay) | Covers medical expenses, health insurance deductibles and funeral costs for you and your passengers after an accident, no matter who’s at fault | No |
| Personal injury protection (PIP) | Covers medical bills, lost wages, household services and funeral costs for you and your passengers, regardless of who’s at fault | Depends on the state |
| Underinsured motorist bodily injury (UIMBI) | Covers medical expenses for you and your passengers if you’re hit by a motorist who doesn’t have enough car insurance | Generally not |
| Uninsured motorist bodily injury (UMBI) | Covers medical expenses for you and your passengers if you’re hit by a motorist who doesn’t have car insurance | Generally not |
| Underinsured motorist property damage (UIMPD) | Covers the cost of repairs to your car if you’re hit by a motorist who doesn’t have enough car insurance | Depends on the state |
| Uninsured motorist property damage (UMPD) | Covers the cost of repairs to your car if you’re hit by a driver who doesn’t have auto insurance | Depends on the state |
When looking for car insurance coverage, familiarize yourself with your state’s insurance guidelines. You don’t want to be caught off guard by a deductible requirement you didn’t expect.
When Will I Have To Pay an Auto Insurance Deductible?
There are a few common instances in which you’ll have to pay a car insurance deductible. These scenarios include:
You’re at Fault for a Car Accident
If you have collision coverage, you’ll have to pay a deductible when getting car repairs.
You File a Comprehensive Claim
If your car is damaged in a non-collision circ*mstance, such as a natural disaster or vandalism, you’ll have to pay a deductible before your policy kicks in.
You File a PIP Claim
If you live in a no-fault state, you’re required to hold PIP insurance (though Kentucky, New Jersey and Pennsylvania allow drivers to opt out). Depending on the state, you’ll pay a deductible before the policy covers any medical costs. Utah doesn’t permit deductibles for PIP insurance.
You File an Uninsured Motorist Claim
There are two kinds of uninsured motorist coverage: bodily injury (UMBI) and property damage (UMPD). UMBI typically doesn’t require a deductible, but UMPD often does. If you live in a state with a required UMPD deductible, you’ll have to pay it before your insurer covers your repairs.
The At-Fault Driver’s Insurance Takes Too Long To Process
In this case, you can file a claim with your own insurance and pay a deductible when getting your car repaired. Your insurer will likely try to recover your deductible from the at-fault driver’s insurance company. You also have the option to sue the other driver.
When Do I Not Have To Pay a Deductible?
If you’re not at fault for an accident and the other party’s insurance is paying for vehicle repairs, you won’t need to pay a deductible. You also won’t have to pay a deductible if you’re enrolled in a vanishing deductible program and you’ve earned enough credits to cover the deductible amount.
How To Choose a Deductible
Choosing a deductible comes down to understanding your financial situation. To get a better picture of which deductible makes sense for your needs, consider the factors below.
Risk
When choosing your deductible amount, consider how likely it is that you will need to file an insurance claim. The higher your risk, the more likely you are to be stuck with a large bill. Drivers who are more likely to file an insurance claim:
- Have a history of speeding tickets
- Have prior at-fault accidents
- Drive in a high-risk area
- Drive frequently for leisure or work
Car Age and Value
If your car is more than 15 years old or has a value of $1,000 to $3,000, you may benefit from choosing a plan without a deductible, such as minimum coverage. Older or devalued cars have lower insurance payouts, meaning you could be stuck paying all or most of the repair bill in the event of a claim, anyway.
Loan and Lease Requirements
If you’ve taken out a loan for or leased a new car, the terms of your agreement may require a specific deductible. Check with your loan servicer or lessor if you have questions about your deductible requirement.
Budget
Choosing a higher deductible can lower your annual or monthly car insurance payments. However, you may be stuck with a large bill if you’re in an at-fault accident.
Choosing a high deductible in exchange for low premiums is a smart choice for those who have some savings and a history of safe driving habits.
Other Providers
Whether you’re shopping for a new auto policy or simply want better premiums, it pays to compare quotes from insurance providers. If you’re not satisfied with your deductible or rates with your current provider, take a look at some of the providers we recommend at the end of this article to compare rates.
Car Insurance Deductible: Conclusion
A car insurance deductible is the amount you pay out of pocket before a policy covers your vehicle damage or medical bills. The most common deductible amount is $500, but often you’ll have the ability to choose your deductible.
Selecting a high deductible usually gets you a lower car insurance premium, while choosing a low deductible tends to result in a higher premium. Some types of car insurance don’t require a deductible.
Top Auto Insurance Recommendations
We recommend getting auto insurance quotes from multiple providers when you shop for coverage. This way, you get a clearer understanding of what you can afford and can select the company that offers the best car insurance rates and coverage for your needs. Comparing quotes from State Farm and Geico is a good place to start.
Source: The Ramsey Show
State Farm: Best Customer Expereince
Our review team named State Farm Best Customer Expereince for its combination of coverage options, affordable rates and excellent industry reputation. In addition to standard auto coverage choices, the company offers extras such as rideshare insurance, uninsured motorist coverageand trip interruption benefits for when you have a covered breakdown far from home.
Read more: State Farm insurance review
Geico: Best for Budget-Conscious Drivers
Geico is the third largest auto insurer in the country. The company offers high coverage limits and 16 types of discounts to help drivers save money. Customers can get reduced rates if they bundle their auto coverage with renters or homeowners insurance through Geico. The company offers the six standard types of insurance, as well as add-on options like rental car reimbursem*nt, rideshare insurance and mechanical breakdown insurance (MBI).
Read more: Geico insurance review
Car Insurance Deductible: FAQ
Below are frequently asked questions about car insurance deductibles.
It’s better to have a $500 deductible if you’re a driver that has been in more than one accident or has gotten a DUI in the last three years. If you’re more likely to get into an accident, you won’t want to pay out a higher deductible. However, if you’re generally a safer driver, your car insurance premiums will be lower with a $1,000 deductible.
The most common deductible for car insurance is $500, but what’s best for you depends on your budget and insurance needs. If you choose a low deductible, you’ll usually pay a higher insurance premium.
A $500 deductible is common for car insurance. If you have the budget to pay for car repairs out of pocket, it’s worth considering a higher deductible since you’d have a lower premium.
No, insurance coverage only begins after you pay the deductible.
If the cost of repairs is greater than your deductible, you have the option to file a claim with your insurer. You must pay the deductible first, and then insurance coverage pays the remaining balance up to the limit on your policy.
Our Methodology
Because consumers rely on us to provide objective and accurate information, we created a comprehensive rating system to formulate our rankings of the best car insurance companies. We collected data on dozens of auto insurance providers to grade the companies on a wide range of ranking factors. The end result was an overall rating for each provider, with the insurers that scored the most points topping the list.
Here are the factors our ratings take into account:
- Cost: Auto insurance rate estimates generated by Quadrant Information Services and discount opportunities were both taken into consideration.
- Coverage: Companies that offer a variety of choices for insurance coverage are more likely to meet consumer needs.
- Reputation and experience: Our research team considered market share, ratings from industry experts and years in business when giving this score.
- Availability: Auto insurance companies with greater state availability and few eligibility requirements scored highest in this category.
- Customer experience: This score is based on volume of complaints reported by the NAIC and customer satisfaction ratings reported by J.D. Power. We also considered the responsiveness, friendliness and helpfulness of each insurance company’s customer service team based on our own shopper analysis.
Our credentials:
- 800 hours researched
- 45 companies reviewed
- 8,500+ consumers surveyed
*Data accurate at time of publication.
If you have questions about this page, please reach out to our editors at editors@marketwatchguides.com.
