How Car Insurance Deductibles Work (And How to Choose the Right One for You)
When it comes to car insurance, a common question we hear at Hanby Insurance is: “What exactly is a deductible, and how does it affect my coverage?”
It’s a great question, because your deductible plays a big role in how your policy works, what you’ll pay out of pocket, and even how much your premium costs. Let’s break it down.
What is a deductible?
A deductible is the amount of money you agree to pay out of pocket before your insurance company steps in to cover the rest of a claim.
For example:
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If you have a $500 deductible and cause $5,000 worth of damage to your car in a covered accident, you’ll pay the first $500 toward repairs, and your insurance will take care of the remaining $4,500.
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If the repair bill is less than your deductible (say, $400), then you’d pay the full amount, and insurance wouldn’t need to step in.
Why do deductibles exist?
Deductibles help keep insurance affordable for everyone. They prevent small claims from being filed for every ding or scratch and ensure that coverage is reserved for more significant losses.
How your deductible affects your premium
There’s a tradeoff between your deductible and your monthly premium:
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Higher deductible = lower premium. You’re agreeing to pay more out of pocket if something happens, so your monthly cost is lower.
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Lower deductible = higher premium. You’re paying a little more each month in exchange for paying less out of pocket if you have a claim.
It’s all about finding the right balance for your budget and comfort level.
Choosing the right deductible
There’s no one-size-fits-all answer. Here are a couple of questions to ask yourself:
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Could you comfortably pay your deductible tomorrow if you had a claim?
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Do you want lower monthly premiums, even if it means a bigger bill in the event of an accident?
At Hanby Insurance, we recommend choosing a deductible amount that fits both your emergency fund and your peace of mind.
We’re here to help
Understanding your deductible is just one piece of the puzzle when it comes to protecting yourself and your car. If you’re unsure about which deductible makes the most sense for you, our team at Hanby Insurance is here to walk you through your options and help you make a confident choice. You can also check out our Auto Insurance Buyers Guide.
After all, insurance isn’t just about paperwork—it’s about protecting what matters most, and making sure you feel supported when life throws a curveball.