What are car insurance deductibles?
Chances are, if you’ve had a car, home, or health insurance policy, you’ve encountered a deductible. However, if you’ve never made an insurance claim, it’s unlikely you’ve dealt with one. So, what exactly is a deductible?
A deductible is the amount of money you are responsible for paying before your insurance company gets involved. It’s the financial buffer between you and the carrier.
Unlike health insurance, where the deductible resets yearly, with car insurance it resets after each claim.
What parts of the auto policy have deductibles?
Deductibles can apply to three common insurance coverages.
- Comprehensive (aka other than collision)
- Personal Injury Protection (PIP)
Our article “comp vs. collision” mentioned that a deductible is always involved with this coverage. If you hit something while driving, collision is the part of the policy that pays for your car’s damage. The amount that the insurance company will pay depends on your deductible amount.
Comprehensive works in the same way its friend collision does. If a tree limb falls on your car’s hood, that’s a comprehensive claim, and your claim amount is reduced by the size of your deductible.
Personal Injury Protection
This one is sneaky and has surprised many people (usually after it’s too late). Unlike comp and collision, PIP is mandatory coverage in New York State. It’s the only required coverage that could inadvertently end up with a deductible. There is more on that ahead.
Can I choose how much of a deductible I want?
For the most part, yes, there is flexibility on the deductible level available. Most carriers will offer as low as $100.00 and as high as $2,000 for comp or collision. Some will go higher, but that isn’t typical.
If you have a loan or lease the vehicle, your options are less broad. Banks require you to not only carry comp and collision on the car, but most want the deductibles at $1,000 or less. On a lease, $500 is often the maximum.
The lower you make your deductible, the higher your premium will be. Remember, this is the buffer between you and the insurance company. The thinner that layer is, the sooner they must write a check.
Deductibles come in $50 or $100 increments. The most common are $250, $500, or $1,000. So, if you were hoping for a $327 option, you’ll be disappointed!
You can also choose different deductibles for comp and collision. Many choose the same amount for each. However, it’s not uncommon for one to choose a lower comprehensive deductible. Comp and collision deductibles are not policy wide. You can have one car with $200 deductibles and another with a $1,000 option.
As we mentioned in our article “Comp vs. Collision,” glass breakage is covered within the comprehensive section of your car insurance. However, glass coverage can have a separate deductible, and most choose to have a zero-dollar deductible. Nevertheless, check with the agent or policy to confirm; otherwise, a broken windshield will default to your comprehensive deductible.
What about personal injury protection?
Personal injury protection (PIP), also known as no-fault insurance, covers people who were injured while in your car. It also covers pedestrians you “bump” into. It pays for medical expenses and is used before any health insurance is applied.
PIP also has a deductible that can be added. New York State allows insurance carriers to apply up to a $200 deductible per person injured in your vehicle. If three people received medical attention, that’s $600 out of pocket. Again, PIP is primary coverage, so it still applies even if your deductible has been met on your health plan.
Unlike comp and collision, the PIP deductible is policy wide. Each car has the same PIP deductible. The PIP deductible can be waived and really should be. There are almost no savings by carrying a deductible here. Review your quote or policy, as some carriers and agents will add it by default.
Can I get a quote with different options?
It can be hard to know what deductible to choose without knowing the cost differences. If you’d like to review them, we’d be happy to help. Other topics and information is in the article How to Get Car Insurance. You can start by tapping the Get Quote button below. One of our masters of car insurance deductibles will be in touch.
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