Is High or Low Deductible Car Insurance Right for You?

Why You Can Trust trust shield

At, it’s our mission to find simple ways to help our customers save money on the things they need. While we partner with some of the companies and brands we talk about in our articles, all of our content is written and reviewed by our independent editorial team and never influenced by our partnerships. Learn about how we make money, review our editorial standards, and reference our data methodology to learn more about why you can trust

Updated May 26, 2022
Man fixing vehicle in body shop after accident

Is having a high deductible car insurance policy better than a low deductible? Financial Experts will tell you a high deductible car insurance plan is smart because your monthly premium payments will be lower. “Good deal,” you think, and so you opt for the $1,000 deductible.

Then you hit a telephone pole while backing out of a parking space. When you take your car to the body shop for a quote, you realize you have to pay the $1,000 deductible before your insurance will help with your claim at all. Repair costs are less than $1,000 so you don’t get any financial assistance from your insurance company. How is this a good deal?

When you’re weighing high or low deductible car insurance, you have to consider a few factors, including your finances, your driving record, and your premium costs. We’ll help you choose.

What Is a Car Insurance Deductible?

First off: let’s explain what this ‘deductible’ thing is. Your car insurance deductible is the amount you pay out of pocket when you make a claim. 

For example, if a broken windshield costs $400 to replace and your deductible is $250, you’ll pay $250 and your insurer will pay $150. 

The most common deductibles are $500 and $1000, but it can range anywhere from $0 to $2,000 depending on your coverage. 

What are the Different Types of Car Insurance Deductibles?

When you purchase auto insurance, your policy will have optional coverage that requires you pay a deductible. They will generally include the following:

  • Comprehensive Coverage: This kicks in to repair your vehicle when it’s damaged in situations outside of an accident. You might have a tree fall on your car, hit a deer, have hail damage, or get your car stolen.
  • Collision Coverage: This coverage helps you repair your vehicle after an accident, whether you’re at fault or not.
  • Uninsured and Underinsured Motorist Coverage:  This coverage helps pay for costs when you get in a collision with an uninsured driver. It also includes drivers who don’t have enough coverage to pay for the costs of the accident.
  • Personal Injury Protection: Medical costs are no joke, and they can quickly accumulate depending on how much damage occurs. This insurance covers medical costs like ER visits and pays for lost wages.

How Does A Car Insurance Deductible Work? 

Why can’t your insurance company just pay the whole cost? A deductible represents “a sharing of the risk between the insurance company and the policyholder,” according to the Insurance Information Institute. In other words, you might be more careful about parallel parking if you know you’ll have to pony up $500 for repairs to your bumper.

A car insurance deductible typically applies only to the parts of your policy concerning damage to your property: comprehensive and collision coverageLiability coverage has no deductible. So if you hit someone else at a red light, your insurance will pay the entire cost (up to your coverage limits) of repairs to the other driver’s vehicle. Got it?

How Can I Change My Car Insurance Deductible?

man on the phone changing his car insurance deductible

If you decide you want to lower or increase your insurance deductible, most companies make it easy to do so. You can call your insurance agent or visit your insurer’s online portal to change your deductible. 

If you decide to change it, your insurance company holds the right to renew your insurance policy from the date you made the changes instead of your original date. However, the early renewal and changes to your deductible could have you seeing higher monthly rates. 

How Does Changing My Deductible Impact My Auto Insurance?

Changing your deductible impacts your auto insurance rates. Paying a higher deductible means you’ll pay a lower monthly rate, and paying a lower deductible means making a higher monthly payment. When you choose to pay a higher deductible, you assume more responsibility, and your insurer rewards you with cheaper premiums.

While a lower monthly rate may sound nice, don’t rush to change your policy just yet. Let’s take a closer look at some of the pros and cons of low vs. high car insurance deductibles.

The Pros and Cons of a Low Car Insurance Deductible

Having a low car insurance deductible gives you peace of mind, especially if you’re on a tight budget. If your finances would be seriously rocked by an unexpected $500 or $1,000 expense in the event that you need to file a claim, play it safe and opt for a low deductible, such as $250. Some companies even offer a $0 deductible, so you’ll never have to pay a dime on top of your regular premiums if your car needs some TLC after an accident.

Having a lower deductible means you’ll pay more in monthly premiums, but you won’t have to panic if something happens to your car. If you have a history of backing into another car in the Starbucks parking lot (no judgment!) a low deductible car insurance policy is probably a good choice.

You’ll also want to opt for a lower deductible if you’re leasing or financing your car. Most lease/finance agreements mandate a deductible of $500 or less, so that takes the decision out of your hands. If you’re driving a beater car, you may even drop your collision and comprehensive coverage entirely. No comprehensive coverage, no deductible

The Pros and Cons of a High Car Insurance Deductible

The biggest reason to go with a high auto insurance deductible? It lowers your monthly premiums, sometimes dramatically. The Insurance Information Institute calculates that raising your deductible from $200 to $500 can reduce your premiums by 15 to 30 percent. Double your deductible to $1,000 and you could save 40 percent.

These numbers sound good, but remember they’re just estimates — and the savings only apply to premiums for collision and comprehensive coverage. To determine if high deductible car insurance will save you a significant amount of money, you’ll have to run the numbers. 

Use Compare’s free auto insurance quote tool to play around with your deductible amounts and see how they affect premiums.

Then, do a little more math. How long will it take for your annual savings to equal the cost of your high deductible? Say you’re saving $50 per year on premiums for raising your deductible from $250 to $500, but then you have to make a claim. It’ll take five years for your savings to equal the $250 you spent. On the other hand, if you decline to make an insurance claim and just pay for everything out of pocket, your insurance premiums may remain lower in the long run.

The best option? Compare quotes on Look at a couple of different deductibles and see how much you’d really be saving by opting for a $0 vs. $1,000 deductible.

Be sure you’re making the right deductible decision based on your budget and needs.

Is it Better to Have a $500 or $1000 Deductible? 

Many people go back and forth when choosing between a $500 and $1000 deductible. If you can afford the out-of-pocket payment after a collision, a higher deductible might be better. However, you should always consider how much you can afford for monthly premiums and your overall financial situation as well.

Note: Auto insurance companies generally use the average car insurance deductible of  $500 for insurance premium estimates. Check to see if there are significant changes in cost with a $1000 deduction.

Factors to Consider When Choosing a Deductible

Selecting a car insurance deductible depends entirely on your situation. What works for one driver may not work for another. Here are some factors you should consider when choosing a deductible.

How Often You File Claims

Are you a driver who tends to file claims often? For example, you might file more claims than the average driver if you have many accidents on your record, have a long commute on busy roads, or live in a city with high crime rates.

When choosing your deductible limit, think about paying it multiple times. If the number doesn’t cause your blood pressure to rise, you should be fine.

The Value of Your Vehicle

Think about the value of your vehicle before choosing your insurance deductible. First, figure out how much your car is worth to your insurer. You should also consider the value of your car compared to the cost of repairs.

Let’s say you drive an older car that doesn’t cost much to repair. As your vehicle’s value goes down, the higher your chances of experiencing a total loss if you’re in a collision. If you can afford to pay for its repairs out of pocket, it’s probably better to choose a higher premium.

On the other hand, you might drive a newer car with expensive parts to repair. Drivers who don’t want to pay for the cost of these parts out of pocket should choose a lower deductible.

Emergency Fund Availability 

What is the current state of your emergency fund? Many people initially choose a higher deductible to save money on their monthly insurance payments. However, if your emergency fund is low or non-existent,  you could find yourself in a tough spot when it comes time to pay after filing a claim.

Imagine getting into a collision, and your car requires $2,000 of repairs with a $1000 deductible. Are you able to pay $1,000 out of pocket right now? Or does your financial situation not allow for that? If you’re not sure you could fork over that kind of cash, you might want to consider a lower deductible.

Car Insurance Deductible FAQs 

What is a car insurance deductible?

A car insurance deductible is an amount you pay to your auto insurance company when filing a claim before they will contribute.

What kind of car insurance deductible should I choose? 

The most common car insurance deductible amounts are $500 and $1000. However, you should consider your financial situation, the cash value of your car, and how much you save from choosing a higher deductible,

Is a lower car deductible better for me? 

It depends. A lower car deductible means that you won’t have to pay a lot out of pocket after a claim. However, this will result in higher monthly payments.

Can I lower my current car insurance deductible? 

Yes, you can lower your deductible by calling your insurance provider or visiting your insurer’s online portal.

Compare Car Insurance Quotes

About’s #1 goal is to save you money. We publish resources that are based on hard-hitting data and years of industry experience to help you make more informed decisions with your wallet.

  • All of’s content is written and reviewed for accuracy by a team of experienced writers and editors who are experts on the topics they cover.
  • None of’s content is ever influenced by the companies and brands we partner with.
  •’s editorial team operates independently of any of the company’s partnership or business development interests. We publish unbiased information strictly for the benefit of our readers.
  • All of the content you see on is based on comprehensive analysis and all data is gathered and vetted from trustworthy sources.

Learn more about us, our team, and what makes us tick.