Car insurance deductibles

Car insurance may seem complicated, but understanding your deductible is a great step toward feeling confident about your coverage.

Let’s take a closer look at what a deductible is, how it works, and how you can choose the right option to meet your needs.

What is a car insurance deductible?

Your deductible is the amount you agree to pay out-of-pocket for covered repairs or damages before your insurance kicks in to help. You can choose your deductible and policy coverage limits at any time, so you have more control over your insurance costs.

How do car insurance deductibles work?

When you purchase your policy, you can select a deductible option that fits your budget. If you’re in an accident or experience damage that's covered under your policy, you'll pay your deductible first, and your insurance will help cover the rest.

Example: You’re in a covered accident, and it will cost $2,000 to repair your vehicle. First, you pay your $500 deductible, and then your insurance kicks in to help cover the remaining $1,500.

If the cost of repairs is less than your deductible, it usually doesn’t make sense to file a claim.

Example: You have a covered accident with repair costs totaling $400. If your deductible is $500, you’d pay the entire cost yourself and not file a claim.

Remember — unlike some health insurance plans — auto deductibles apply each time you file a claim.

What are some common deductible options?

While they can vary, common comprehensive and collision deductibles are $250, $500, or $1,000. At American Family Insurance, you can select from these options to find what works best for you.

Choosing low deductibles vs. high deductibles

Choosing a higher deductible means you’ll pay lower monthly premiums because you agree to carry more of the risk — and therefore the cost — if something happens. On the other hand, selecting a lower deductible can result in higher premiums, but you’ll pay less if you need to file a claim.

How do you decide which deductible is right for you? Here’s a quick comparison:

Lower auto insurance deductibles

• Pay less out of pocket if you file a claim
• Pay more in premiums

Higher auto insurance deductibles

• Pay more out of pocket if you file a claim
• Pay less in premiums

Auto deductible scenarios

Low-deductible example: A thunderstorm knocks a tree branch onto your car, causing $1,500 in damage. You chose comprehensive coverage with a $250 deductible, so typically it would make sense to file a claim and have your insurance pay for the remaining $1,250.

High-deductible example: You hit a tree, and repairs to your car will cost about $1,000. You selected a lower monthly premium with a collision deductible of $1,000. In this instance, your deductible is the same as the repairs, so you’d pay for the repairs yourself rather than filing a claim.

Deductibles with American Family Insurance

American Family makes it easy to set up your car insurance policy and choose a deductible:

1. Get an auto insurance quote and buy coverage — just contacting your agent or call 1-800-MYAMFAM (1-800-692-6326).
2. Have your info ready — names, addresses, dates of birth, accident/violation history for all drivers in your household, and details about your current insurance policies.
3. Select a deductible that works best for your budget and needs.

This article is for informational purposes only and based on information that is widely available. This information does not, and is not intended to, constitute legal or financial advice. You should contact a professional for advice specific to your situation.

This information represents only a brief description of coverages, is not part of your policy, and is not a promise or guarantee of coverage. If there is any conflict between this information and your policy, the provisions of the policy.