A deductible is the portion of certain covered losses that you agree to handle yourself. The insurance company then handles the remaining covered amount according to the policy’s terms, limits, exclusions, and claim evaluation.

For example, if your vehicle has a covered collision loss and your collision coverage has a $500 deductible, the deductible affects how much of that covered loss is paid by you and how much may be paid by the insurer.

A deductible is different from your premium. Your premium is what you pay to maintain the policy. Your deductible is an amount that can apply when you have a covered loss under a coverage that includes one.

The easiest way to understand a deductible is to separate the covered amount of damage from the amount you agreed to absorb yourself.

In this simplified hypothetical example, you would be responsible for $500 and the insurer could pay $3,500 if the entire $4,000 loss is otherwise covered by the policy.

The exact claim process can differ. Depending on how the claim is handled, the deductible may effectively be subtracted from the insurer’s payment or reflected in the amount you owe toward repairs.

Deductibles are especially common with physical damage coverage for your own vehicle. However, the exact structure depends on your policy and applicable state rules.

The main takeaway is that you should not assume one deductible applies to the entire auto policy. Your collision deductible and comprehensive deductible may be different, and other coverages can operate under different rules.

Collision and comprehensive coverage protect your vehicle against different types of losses, so insurers generally treat them as separate coverages. That means each coverage can have its own deductible.

Your collision deductible applies to covered collision losses. Your comprehensive deductible applies to covered non-collision losses under comprehensive coverage.

For example, a policy could have a $1,000 collision deductible and a $500 comprehensive deductible. Those numbers are only hypothetical examples; the options available to you depend on the insurer and policy.

If the amount of an otherwise covered loss is below your deductible, there generally would not be an insurance payment under that coverage because the deductible is larger than the covered damage.

Suppose you have a hypothetical $1,000 collision deductible and a covered collision causes $700 in damage. The covered damage does not exceed the deductible, so you would generally handle the $700 cost yourself.

This is one reason the deductible matters when deciding whether a particular physical damage coverage is useful for your vehicle and financial situation.

The deductible you choose can affect your premium because it changes how much financial risk you keep and how much risk the insurer accepts.

In general, choosing a higher collision or comprehensive deductible can reduce the premium for that coverage. Choosing a lower deductible generally increases the premium because the insurer may become responsible for a larger share of a covered loss.

The premium difference is not universal. It depends on the insurer, vehicle, driver, location, coverage choices, deductible options, and other rating factors permitted under applicable state rules.

A higher deductible can make sense when the premium savings are worthwhile and you could comfortably pay the deductible after an unexpected loss. The mistake is choosing a deductible based only on the lower premium without considering the amount you would need to produce after a claim.

Before increasing a deductible, consider:

Do not compare deductibles in isolation. Ask how much each deductible option changes the actual premium for the same coverage.

Suppose an insurer offers you two hypothetical collision deductible options. One is $500 and the other is $1,000. The higher deductible exposes you to an additional $500 of potential out-of-pocket cost on a covered claim.

The useful question is how much premium you save by accepting that additional $500 of risk. If the difference in premium is small, the higher deductible may be less attractive. If the savings are meaningful to you and you can comfortably handle the higher deductible, the tradeoff may be more reasonable.

Fault does not automatically determine whether your deductible applies. What matters is which coverage is being used to pay for your vehicle damage and how the claim is handled.

If you use your own collision coverage after an accident, your collision deductible may initially apply even when another driver appears responsible. Your insurer may later attempt to recover money from the responsible party or that party’s insurer. Whether a deductible is ultimately recovered or reimbursed depends on the claim, recovery process, policy terms, and applicable law.

If another driver’s liability insurer handles your covered vehicle damage directly, the process can be different. Do not assume that every not-at-fault accident eliminates your deductible automatically.

Before assuming you know how a deductible will work, check your actual policy and declarations page. Important details can include:

• Your collision deductible.
• Your comprehensive deductible.
• Whether special deductibles or coverage rules apply to certain losses.
• How glass-related claims are handled under your policy and state rules.
• Whether a lender or lease agreement limits your deductible choices.
• How a deductible applies when a vehicle is declared a total loss.
• Whether any deductible recovery may be possible after another party is found responsible.

Policy language and state law can change the answer in particular situations, so the deductible shown on your declarations page is only one part of understanding how a claim will be settled.

Car insurance deductibles determine how much financial responsibility you keep when certain covered losses occur. Collision and comprehensive coverage commonly have deductibles, and increasing those deductibles can reduce your premium while increasing your potential out-of-pocket cost.

The lowest premium does not automatically produce the best deductible choice. A deductible is useful only if you can realistically afford it when you need to file a claim.

Review the collision and comprehensive deductibles on your declarations page, ask your insurer how alternative deductible options would change your premium, and compare the savings with the additional financial risk you would accept.

• National Association of Insurance Commissioners, Auto Insurance, 2025.
• National Association of Insurance Commissioners, A Consumer’s Guide to Auto Insurance: Determining Your Premium, 2022.
• National Association of Insurance Commissioners, Consumer Auto, accessed 2026.
• National Association of Insurance Commissioners, A Shopping Tool for Automobile Insurance, accessed 2026.