What a Collision Deductible Is and How to Choose Your Amount – Credible

Your collision insurance deductible is the amount you pay before your insurance kicks in. The higher your collision deductible, the lower your premium will be.
Andrew Dunn

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Collision insurance can be a huge benefit if you’re in an accident. This coverage pays to repair or replace your vehicle if you run into another car or an object like a guardrail or telephone pole. But you’ll have to pay some money out of your own pocket first — your deductible.
Here’s what you need to know about collision deductibles, including how they work and how much you might pay:

A collision deductible is the amount you’ll pay out of pocket toward repairing or replacing your vehicle before your auto insurance kicks in to cover the rest of the bill. Most collision insurance policies include a deductible, though the amount you’ll pay will depend on your specific policy.
The deductible sets collision insurance apart from some other coverages in your auto insurance policy. Liability insurance, which pays for injuries and damage to another driver’s vehicle if you’re at fault in an accident, doesn’t have a deductible.
In many cases, you’ll pay the amount of your deductible directly to the mechanic, body shop, or other car repair establishment that fixes your car after an accident. Then the insurance carrier will pay the remainder of the bill. Other times, your insurer will simply subtract your deductible from your insurance payout.

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Some insurance providers offer a product known as a collision deductible waiver. With this waiver, you won’t need to pay a deductible when you file a claim against your collision insurance policy under certain circumstances. However, this is an additional coverage, so you’ll pay extra for it.
Check Out: How Long After a Car Accident Can You File a Claim?

Collision insurance is part of most standard auto insurance policies, but it’s an optional coverage. This type of insurance protects you financially if you’re in an accident that damages your vehicle. You may use your collision insurance policy if:
Generally, you’ll use collision insurance regardless of who’s at fault in the accident. If you hit another car and the other driver is found to be at fault, their insurance may end up being responsible for the damages. In this case, your insurance carrier will typically seek reimbursement after paying to repair your car.
If you’re in one of these situations, you’ll file a claim with your insurance provider. The insurance carrier will investigate the claim and help you determine the cost of repairing the vehicle and find a mechanic who can do the work. This is where your deductible comes in. You’ll either pay the amount of your deductible to the body shop or mechanic fixing your car, or your insurer will subtract your deductible from your insurance payout.
If your car is totaled — meaning it’s not cost-effective to repair it — your insurance provider will generally send you a check for the value of the vehicle minus your deductible.
Most states don’t legally require collision insurance. However, if you financed the purchase of your vehicle, your lender may require you to carry collision insurance until the car is paid off.
Learn More: Full Coverage Car Insurance: What Does It Mean?
When you shop for an auto insurance policy, you’ll typically have a range of deductibles to choose from. If you opt for a lower deductible, your premium will generally be higher. That means you’ll pay more each month, but you’ll pay less out of pocket if you file a claim with your insurance carrier.
If you choose a higher deductible, your premium will typically be lower. This saves you money each month, but means you’ll pay more if you’re in an accident and need to use your insurance.

Insurance carriers usually offer a range of collision insurance deductibles. It’s important to choose the deductible that gives you the best premium for your budget, while still protecting you from a repair bill that breaks the bank.
Standard collision deductibles include:

Think about the following factors when deciding on your collision insurance deductible:
Learn More: What is a No-Fault Accident?

You may wonder, “Is it better to have a $500 deductible or $1,000?” The answer depends on your individual circumstances and finances.
You’ll need to evaluate whether you’d prefer a lower monthly payment with the risk of paying a high deductible, or if you’d rather pay more each month for a larger amount of coverage.
Before settling on a policy, make sure to shop around and get quotes from multiple insurance carriers. Compare the deductible and premium combinations available from each provider, and pick the insurance policy that makes the most sense for you.
If you already have another insurance policy with a particular insurer — a homeowners or renters insurance policy, for example — you may consider getting your car insurance policy from the same one. In many cases, insurance carriers offer a discount if you have multiple insurance policies under their umbrella. This is called bundling, and it can potentially save you a significant amount of money on your premium.

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Disclaimer: All insurance-related services are offered through Young Alfred.
Andrew Dunn is an award-winning mortgage and finance writer with a decade of experience covering the industry with articles published at Fox Business, LendingTree, Credit Karma, Axios Charlotte, and more.
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