How To Choose A Car Insurance Deductible


How To Choose A Car Insurance Deductible

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.