How to choose an insurance deductible

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Your car insurance deductible is one factor that changes how much you pay in premium—or, in plain English, how much you pay for car insurance. In the Root app, you can instantly see how different deductible amounts change what you’ll pay up-front for car insurance.

But, it’s important to know that deductibles are more complicated than they seem. You’ll want to think about your personal situation and how much you want to pay out of pocket after an accident. We’re here to walk you through the details, but the final decision is yours to make.

Insurance deductible definition

Your deductible is how much you pay after you file a claim. Let’s say you accidentally drive into a tree. When you file the claim, you’ll pay the deductible before insurance kicks in.

Laws vary by state, but your deductible may be a specific dollar amount. If you aren’t sure how the deductible works on your policy, your policy documents should have a very clear definition.

Car insurance vs. health insurance deductibles

You may be familiar with deductibles from your health insurance. Car insurance deductibles are a bit different. Health insurance deductibles are based on a yearly amount, while car insurance deductibles are per accident.

Let’s say your health insurance deductible is $1,000. Once you have paid that amount in a calendar year (January-December), you wouldn’t pay anything else until the following January. With car insurance, if you are in an accident with a $1,000 deductible, you pay it before your insurance kicks in. If you get into another accident a few months later, you would need to pay $1,000 again.

What will it cost?

Deductibles determine how much you pay for your insurance. The good news is, you can choose the deductible amount for your coverage. The tough part (for most people) is knowing what amount is best for your situation.

If you choose a high deductible, your overall car insurance cost is lower. If you choose a low deductible, your car insurance cost is higher. Once you choose a deductible amount, you’re not stuck with it forever. You can easily manage your policy in the app at any time—but you may have to pay additional costs depending on the changes.

When you need a deductible

Deductibles are typically required for the following coverages:

If you’re only looking for the minimum required coverage in your state (typically, Liability) you won’t need to worry about a deductible.

Check out the rest of Root’s coverage options.

When you won’t need to pay a deductible

There are a few situations where you can keep your wallet in your pocket.

If the other driver is at fault

The other driver’s insurance company would pay for any damage. If they don’t have insurance (or not enough), that’s when Uninsured/Underinsured Motorist coverage comes into play.

If you have to file a Liability claim

Liability insurance doesn’t have deductibles. However, Liability uses limits—so you choose the maximum amount your insurance may pay for a Liability claim.

If you’re filing a glass repair claim

Glass repairs are covered under Comprehensive coverage. Some states may require a deductible if you’re replacing windshield glass.

3 quarters falling - when you won't need to pay a car insurance deductible

3 questions to ask before choosing a deductible

Every situation is different. Before you pick a deductible, consider your personal situation along with these 3 questions.

Do you have an emergency fund?

Saving money can be hard, but sometimes it’s worth it. Say you’re at fault in an accident. Would you have emergency funds to cover your out-of-pocket costs? Would you want to use these funds to help with out-of-pocket claim expenses or for other emergencies, such as medical expenses or monthly bills? It’s worth considering.

Why it matters: If you hit a mailbox and cause $500 in damage, but have a $1,000 Comprehensive/Collision deductible, you’re better off not filing a claim. But that means you still owe $500.

How much is your vehicle worth?

If you’re driving an older vehicle that isn’t worth a lot of money, you may not want Collision or Comprehensive insurance on your policy (meaning, no deductible).

Why it matters: Let’s say your car is worth $1,500. Even a $500 deductible may not be worth paying to fix your car.

Can you handle the unknown?

Let’s face it, you can’t predict the future. (But wouldn’t it be great if you could?) If you choose a high deductible and need to file a claim, will you be able to pay the deductible?

Why it matters: You chose a $1,000 deductible to keep your premium cost down. You’re a safe driver but hey, accidents happen. Now you owe $1,000 before your insurance kicks in.

Root is making insurance easy

Our insurance blog can help you learn more about your coverage options and answer your insurance questions. When you’re ready to get a quote or manage your policy, the Root app walks you through your options based on your state’s requirements. Whether you’re opting for a low or high deductible, we’re ready to help if you ever need to file a claim. Plus, some of our customers have saved up to 52% on their car insurance compared to their previous insurance carrier.

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Based on savings reported by actual customers who purchased a new Root policy between September 2018 - August 2019; changes in coverage levels not evaluated.

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