What Is a Car Insurance Deductible?

In simple terms the deductible is the amount “deducted” from car repairs resulting from collisions or other accidents before insurance will cover expenses. It is the amount you as an insured must pay out of your own pocket. For example, if your deductible is $500 and your car repairs cost $2,000, the insurance company will only pay for $1,500 of the bill. If the car is damaged badly, your collision and comprehensive coverage will pay up to the amount of your policy’s limit or the value of your vehicle. When the damage outweighs the car’s value, the insurance adjuster considers it a total loss, or “totaled.” Your deductible will be subtracted from any settlement made on a claim.

Car insurance deductibles are related to claims on collision and comprehensive coverage, not liability claims. Comprehensive coverage involves damage to the car from incidents other than collisions. Comprehensive coverage also includes theft. If your car is stolen and never recovered, you receive the value of your vehicle at the time of the crime minus your deductible.

While there is no deductible on liability insurance, your coverage extends only to the limit of your policy.