What is a car insurance deductible?

A car insurance deductible is the maximum amount of money you would have to pay to cover damages and repairs in the event of an accident. Your insurance then covers the rest. Your deductible serves as an upper limit on unexpected expenses (per accident).

For example, if you’re at-fault in an accident and you cause $2,000 worth of damage to someone else’s car and you have a deductible of $1,000, you will only have to pay $1,000 toward the repair. The insurance company pays the remaining $1,000.

Go high or go low?

Higher deductibles can generally lower your insurance premiums. Lower deductibles can generally raise your insurance premiums. So you need to decide how much protection you want to your pocket book:

  • If you want a lower fixed monthly cost and are comfortable with a high out-of-pocket cost in the event of an accident, go with a higher deductible.
  • If you can afford to pay a little more each month and want a lower upper-end limit on your out-of-pocket in the event of an accident, go with a lower deductible.

Carefully consider how much you can afford to pay without causing undue stress on your personal finances. Think about how much cash you have on hand, and how much credit is available to you.

We’ll be happy to talk it through with you and help you make the right decision for your current situation. You can change your deductible later, if your situation changes.