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How do I pay my car insurance deductible?

Here's what you need to know...
  • A car insurance deductible is your portion of a loss that you must pay for before your insurance will kick in to cover repairs
  • Deductibles apply to physical damage coverage carried on a Personal Auto Policy
  • If you select physical damage coverage, you can choose a different deductible for comprehensive and collision
  • When you file a claim, your damages must exceed the deductible that you carry for the coverage for your insurance to issue payment
  • Companies will either deduct your portion from the claims check or request that you pay your deductible directly to the shop for the claims check to be disbursed
  • Deductibles don’t apply to third-party liability claims filed against your policy

Auto insurance protects you against financial loss. In exchange for regular premium payments, the carrier promises to provide you with the coverage that you selected when you purchased your plan. While carriers pay for a huge chunk of the bill when it’s time to repair your car, they don’t take on all of the burden.

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All types of property insurance policies come with a policy or coverage deductible. The deductible is the amount of money that the policyholder is responsible for paying before the insurance carrier will begin to pay for damages. In the auto insurance world, this means that the vehicle owner must foot a portion of the bill when they’re filing a claim for vehicle repairs. Luckily, policyholders get to choose how much they are willing to pay at the time of a loss before they ever need to file a claim.

What is the purpose of a car insurance deductible?

Deductibles play a very important role when you’re insuring a vehicle. Under the insurance contract, you share risk with the carrier. This means that you decide how much risk you want to take on and then you pass on the rest of the financial burden to your insurer.

Not only are they deterrents that prevent a policyholder from filing a small claim, they also help the insurer calculate how much to charge for a specific amount of coverage.

Generally speaking, a high deductible comes with a lower premium. This is because there’s less risk of you actually having a claim that exceeds the portion you’re already responsible for paying. Less risk equals lower premiums and more risk equals higher premiums.

Do deductibles apply to liability coverage?

Not all policies have a deductible attached to them. If you apply for a basic auto insurance policy that only includes liability coverage, you won’t have to worry about selecting a deductible. Deductibles apply to coverage that protects you and not coverage that protects third parties.

When you’re filing a claim and you’re found negligent for damages or injuries, you won’t be responsible for paying a deductible before the claimant is issued compensation. You will, however, have to pay for damages if they exceed your limits that you carry for Bodily Injury Liability and Property Damage Liability. If you don’t pay the excess, the claimant has the right to take you to court to try and collect.

When are you asked to select a deductible?

If you’re not asked to select a deductible for a liability-only policy, you might be wondering when you’re asked to select one. When you’re asking for a quote for full coverage, you’ll be asked to select two deductibles for the physical damage protection. You will select one deductible for your comprehensive coverage and another for your collision coverage. Here’s a brief description so that you understand scenarios where the deductible might be due:

  • Comprehensive: Comprehensive pays for the repairs that need to be made to your vehicle when it’s damaged in a non-moving or non-fault loss. You’ll pay a comprehensive deductible if your car’s damaged because of the following: fire, theft, glass breakage, falling objects, acts of God, explosion, hail, windstorm, flood, vandalism, or collision with a live animal. Your deductible will almost always apply when filing a comp claim. It could be waived if you file a glass repair claim.
  • Collision: Collision pays for repairs that must be made following a crash with any type of real property. Deductibles for collision tend to be higher than those that are selected for comprehensive. In most scenarios, you only pay collision deductible when you’re at fault for a loss. Sometimes, you can get stuck with the deductible without being at fault.

How much is the average deductible?

A majority of auto insurance consumers choose a deductible right around $500. While this is a common selection, you can choose deductibles ranging anywhere from $100 to $2000. You’ll need to really take a look at how much higher deductibles will save you and whether or not a large deductible is realistic. Think about how long you would need to put away your savings before you’d have enough to cover the deductible. If you’re not able to cover your deductible your car could be left inoperable.

Deductibles Are Typically Deducted

As the name might imply, deductibles are most likely deducted from your claims payment. If you’re filing a reimbursement claim or you have a total loss where you’ll be issued a check, the insurer will add up how much they owe you and then subtract your deductible from the total. This is why your policy says ‘ACV minus deductible’ for your limit of physical damage coverage.

Procedures May Be Different Through Partner Repair Shops

If you have a policy through a company who recommends shops to their clients, the process may be a bit different. Since there are agreements between the insurer and the shop, the company will more than likely pay the mechanic directly. Before you can pick your car up, you’ll be asked to pay your deductible to the repair shop with a payment method accepted by the shop. The shop then contacts the insurer to handle the rest of the process.

Are you required to select a specific deductible?

If your vehicle is being leased or financed, there’s a chance that the legal owner of the car may have a limit as to how high your deductible can be. This will be written into your contract provisions under the physical damage insurance requirements. If you find this requirement, just know it’s in place to protect the collateral so that you can always afford to restore it after it’s damaged.

Can you change your deductibles?

You can’t change your deductible after you’ve had a loss. If you don’t have a claim to file, you’re free to change your deductible at any time.

Some companies will require you to bring your car in for photos if you’re selecting a lower amount.

If you’re not happy with your current car insurance rates, it’s time to comparison shop. Start by receiving multiple quotes through an online auto insurance rate comparison tool. After you’ve compared the rates, research each company and choose one with affordable premiums, quality claims service and high customer satisfaction ratings. Enter your zip code in our FREE tool below to compare auto rates now!

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