Understanding Car Insurance Deductibles: What You Need to Know

Your car insurance deductible affects the overall cost of having auto insurance.

When you’re shopping for auto insurance, one of the biggest choices you’ll make is selecting your deductible. Your decision will have a direct impact on how much you’ll pay for coverage each month and how much you’ll pay out of pocket if you must file a claim.

Understanding how deductibles work is especially important if you're in the market for SR-22 or FR-44 insurance, where every dollar counts and costs can add up quickly. Let’s break down what an auto insurance deductible is, how it affects your premiums, and what to consider when choosing the right deductible for your situation.

If you have immediate questions about SR-22, auto, or motorcycle insurance, please contact our Breathe Easy team at (833) 786-0237. Or fill out the form below to request a free quote.

Car Insurance Deductible Definition

Your car insurance deductible is the amount of money you must pay out of pocket before an insurer covers any part of your claim that is subject to the deductible. For example, if your deductible is $500, you must pay $500 toward repairs before your insurance company pays the rest.

You also pay a premium. This is the amount you pay, either monthly or annually, to keep your insurance policy active. Your premium covers the cost of having car insurance, while your deductible only comes into play if you file a claim.

How Do You Choose the Right Car Insurance Deductible?

When you sign up for coverage, you choose a deductible that works with your budget. Insurers offer multiple options, such as $250, $500, $1,000 and $2,500. Any time you file a claim, you must pay your auto insurance deductible first.

Here's an example: Assume you file a claim for $3,000 and have a deductible of $1,000. Once you pay your deductible in full, your insurance company will cover the remaining $2,000 in repairs.

Types of Car Insurance Coverage with Deductibles

Several types of motor vehicle insurance come with deductibles:

• Comprehensive - Comprehensive auto insurance covers damage caused by hail, vandalism, falling objects, fires and anything else that isn't collision-related.
• Collision - Collision insurance covers the damage that occurs when your vehicle collides with an object, such as a concrete barrier or another vehicle. It also covers pothole damage.
• Personal Injury Protection (PIP) - PIP insurance covers the medical expenses and lost wages arising from an auto accident.
• Uninsured Motorist Property Damage (UMPD) - UM insurance covers you if you're in an accident caused by someone who doesn't carry auto liability insurance.

Factors to Consider When Choosing a Deductible

Choosing a car insurance deductible amount isn't an exact science, but it does require careful thought. Budget is probably the most important consideration. If you have limited savings, it makes sense to choose the lowest deductible possible. Choose a higher deductible if you want to save money on your premiums.

You also need to think about your claims history. If you've never filed an auto insurance claim, it may be worth choosing a high deductible to save money. If you tend to file claims often, a lower deductible amount means you’ll pay less out of pocket whenever you need to make a claim.

An insurance broker like Breathe Easy can be a trusted partner to guide you through your deductible selection process.

Impact of Deductibles on Premiums and Claims

When you have a high deductible, you must pay a greater percentage of each claim out of pocket, so your premiums are lower. Your premiums will be higher if you choose a low deductible.

Your deductible also affects your level of financial responsibility when you file a claim. If you have a $5,000 claim and a $250 deductible, you only have to cover 5% of the claim yourself. With a deductible of $2,500, however, you'd be responsible for 50% of the claim.

How Does SR-22 Impact Premiums?

Because an SR-22 certificate is often required after a serious driving offense, like a DUI, it tells insurers you’re a high-risk driver and can cause your premiums to go up at renewal.

The amount of the increase depends on several factors, such as your driving history and the reason you need coverage. Since any premium increase can stretch your budget, choosing the right deductible becomes even more important. However, it's possible to find affordable SR-22 insurance that helps you meet your obligations.

Breathe Easy Can Help You Choose the Right Coverage

Choosing the right car insurance deductible is an important part of managing your insurance costs, especially if you’re dealing with SR-22 or FR-44 requirements.

Breathe Easy Insurance specializes in making the insurance process for high-risk drivers as simple as possible. Whether you need help finding affordable SR-22 insurance, understanding your policy options, or choosing a deductible that meets your budget needs, our licensed agents are ready to help.

Contact us today or call us at (833) 786-0237 to get a personalized car insurance quote and find a deductible that meets your needs.