December 31, 2019

Choosing a deductible

Your car insurance deductible is one factor that puts you in control of how much you pay in premium—or, in plain English—how much you pay for your car insurance rate. 

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. Consider your personal situation and how much you can pay out of pocket after an accident, before you choose a deductible.

What is an insurance deductible? 

Your deductible is how much you pay after you file a claim. Let’s say you accidentally back into a fence. When you file a claim, you must pay the deductible before your insurance kicks in. A deductible is a separate cost from your insurance rate.

Laws vary by state, but your deductible might be a specific dollar amount. If you aren’t sure how your deductible works, your policy documents should provide a clear definition.

Car insurance deductibles versus health insurance deductibles

You might be familiar with deductibles from your health insurance coverage. Car insurance deductibles are a bit different. Health insurance deductibles are based on a yearly amount, while car insurance deductibles apply per accident.

Let’s say your health insurance deductible is $1,000. Once you have paid that amount in a calendar year (January-December), your health insurance kicks in, and you wouldn’t pay anything else towards your deductible until the following January. 

With car insurance, you still have to pay your deductible—let’s also say it’s $1000—before your insurance kicks in. But, if you get into another accident a few months later, you would need to pay your $1,000 deductible again.

How much will your deductible be?

Deductibles affect how much you pay for your insurance rate overall—also known as your premium. The good news is, you choose the deductible amount for your coverage. For most people, the tough part is knowing what amount best fits their situations.

If you choose a high deductible, your overall car insurance rate will be lower. If you choose a low deductible, your overall car insurance rate will be higher, but you’ll pay less per accident before your insurance kicks in. 

Once you choose a deductible amount, you’re not stuck with it forever. You can easily manage your policy in the Root app any time—although, you might have to pay additional costs, depending on what changes you make.

When do you need a deductible?

Deductibles are typically required for these coverages:

• Collision

• Comprehensive

• Uninsured/Underinsured Motorist Coverage (UM/UIM)

Each of these coverages requires a separate deductible. 

If you’re only looking for the minimum required coverage in your state—typically Liability coverage—you won’t need to worry about a deductible.

For an overview of all of Root’s coverage options, visit our coverages page. Or, dig into what each coverage means, what kind of incidents are covered, and any deductibles or limits that might apply in our blog series that breaks down coverages into jargon-free English. 

When do deductibles NOT apply?

There are a few situations where you don’t have to pay your deductible. 

• The other driver is at fault. If you choose to not go through Root, then the other driver’s insurance company would pay for any damage. If they don’t have insurance (or not enough), that’s when Uninsured/Underinsured Motorist coverage comes into play.

• You’re filing a Liability claim. Liability insurance doesn’t have deductibles. However, Liability uses limits—so you choose the maximum amount your insurance would pay for a Liability claim.

• You’re filing a glass repair claim. Glass repairs are usually covered under Comprehensive coverage. Some states might require a deductible, if you’re replacing your windshield glass.

3 questions to ask before choosing a deductible

Everyone’s situation and needs are different. Before you pick a deductible, consider your personal situation by asking yourself these questions. 

1. Do you have an emergency fund? If you’re at fault in an accident, would you have emergency funds to cover your out-of-pocket costs? Would you want to use these funds to help with out-of-pocket claim expenses or for other emergencies, such as medical expenses or monthly bills? It’s worth considering. Why it matters: If you hit a mailbox and cause $500 in damage, but have a $1,000 Comprehensive/Collision deductible, you’re better off not filing a claim. But you still owe $500.

2. How much is your vehicle worth? If you’re driving an older vehicle that isn’t worth a lot of money, you might not choose to have Collision or Comprehensive insurance on your policy. And remember, there’s no deductible if you only have Liability coverage.  Why it matters: Let’s say your car is worth $1,500, and your Comprehensive or Collision coverage deductible is $500. Even a $500 deductible might not be worth paying to fix your car.

3. Are you prepared to handle the unknown? None of us can predict the future. If you choose a high deductible and need to file a claim, will you be able to pay the deductible? Why it matters: If you choose a high $1,000 deductible to keep your overall car insurance rate (premium) down, but you get into an accident, you’ll owe $1,000 before your insurance kicks in.

Car insurance simplified with Root 

When you’re ready to get a quote or need to manage your policy, the Root app walks you through your options based on your state’s requirements. What’s more, the app shows you—in real time—how choosing different deductible amounts and coverages will affect your rate.  

Whether you choose a low or high deductible, you can easily file a claim through the app. Most importantly, good drivers could save hundreds on their car insurance annually, because Root bases your rate primarily on how you actually drive. 

Learn more about all of your coverage options and get answers to your toughest insurance questions.