CarInsurance.com Insights
- A deductible is your share of a covered claim — if your car sustains $1,500 in damage and you have a $500 deductible, you pay $500 and your insurer covers the remaining $1,000.
- Only collision and comprehensive carry deductibles — liability coverage, which pays for damage you cause to others, has no deductible; deductibles apply only to the physical damage coverages on your own vehicle.
- Raising your deductible from $500 to $1,000 saves an average of $188 per year — but only makes financial sense if you have that $1,000 accessible in savings if you need to file a claim.
- One in four drivers now carries a deductible of $1,000 or more — according to the J.D. Power 2025 U.S. Auto Claims Satisfaction Study, 26% of auto insurance customers have moved to deductibles of $1,000 or higher, largely driven by years of elevated premiums. The same study found this trend is hurting customer satisfaction at claim time.
- State savings vary widely — drivers in South Dakota and Wyoming can save up to 29% by raising their deductible from $250 to $1,000; drivers in Florida and North Carolina see much smaller gains of 9% and 12% respectively.
What is a car insurance deductible?
A car insurance deductible is the fixed amount you pay out of pocket before your insurance coverage begins paying on a covered claim. You are responsible for the deductible; your insurer covers the rest up to your policy limits.
Typical deductible options are $250, $500, $1,000, or $1,500, though some policies go as high as $2,500. You choose your deductible when you first purchase a policy. It can be changed at any point while your policy is active, but not retroactively after a claim has occurred.
“For instance, let’s say your car sustains damage in an accident and you seek repairs. The repair cost is quoted at $1,500. If you have a $500 deductible in place, you would pay the first $500 yourself, and then the insurance company would cover the remaining $1,000,” says Deece Catanzaro, an independent insurance agent with Wallace & Turner Insurance in Springfield, Ohio. “Deductibles help distribute risk between the insured individual and the insurance provider and contribute to keeping insurance premiums more affordable.”
Which coverages have a deductible — and which don’t
Not every part of your policy carries a deductible. Deductibles apply only to the two coverages that pay for physical damage to your own vehicle:
Collision coverage pays for damage to your car when it collides with another vehicle or object — another car, a fence, a wall, or a tree. It does not cover animal strikes.
Comprehensive coverage covers everything else — theft, vandalism, flood, hail, fire, falling objects, and animal strikes.
Together, collision and comprehensive are commonly referred to as “full coverage.” Both pay out up to the actual cash value of your vehicle, minus your deductible.
Liability coverage, the portion of your policy that pays for injuries or property damage you cause to others, carries no deductible. You pay nothing out of pocket when a liability claim is made against your policy.
If you own your vehicle outright and it has low market value, dropping collision and comprehensive entirely may make more financial sense than carrying a high deductible on a car not worth much.
“It’s imprudent to have a high deductible — such as $1,000 — on a car valued at only $3,000, as you would end up paying out a significant portion of the car’s worth in the event of a loss,” Catanzaro says.
The deductible-premium trade-off: How the math works
The relationship between your deductible and your premium is straightforward: the higher your deductible, the lower your premium. The insurer takes on less financial risk, so they charge you less.
Here is what the savings look like nationally at three deductible levels:
Raising your deductible from $250 to $500
| Full coverage with $250 deductible | $2,063/year |
| Full coverage with $500 deductible | $1,895/year |
| Annual savings | $168 |
| % savings | 9% |
Raising your deductible from $500 to $1,000
| Full coverage with $500 deductible | $1,895/year |
| Full coverage with $1,000 deductible | $1,707/year |
| Annual savings | $188 |
| % savings | 10% |
Raising your deductible from $250 to $1,000
| Full coverage with $250 deductible | $2,063/year |
| Full coverage with $1,000 deductible | $1,707/year |
| Annual savings | $356 |
| % savings | 17% |
The break-even question is the one most drivers miss: how long would it take for your premium savings to equal the additional out-of-pocket cost if you file a claim? If raising your deductible from $500 to $1,000 saves you $188 per year, you’d recover that $500 gap in savings in roughly 2.7 years — but only if you don’t file a claim during that time.
Speak with a friendly agent and get your quote in minutes!
What higher deductibles are actually costing drivers at claim time
More drivers than ever are carrying high deductibles — and not always by deliberate choice.
According to the J.D. Power 2025 U.S. Auto Claims Satisfaction Study, 26% of auto insurance customers now have deductibles of $1,000 or more. The study, which surveyed 9,455 customers who had settled a claim, found that many of those higher deductibles were adopted as a cost-cutting response to several years of sharply elevated premiums — not as a considered financial decision.
The result has been a meaningful hit to customer satisfaction at claim time.
“Auto insurance customers have made several adjustments to their policies in an effort to reduce costs — such as opting for higher deductibles, dropping rental coverage, avoiding filing claims and, in some cases, foregoing collision coverage altogether,” says Mark Garrett, director of global insurance intelligence at J.D. Power. “These changes have generally had a negative effect on consumers as they are spending more money when they have a claim.”
The study found the trend is most acute among younger drivers: 43% of Gen Z auto insurance customers who experienced a rate increase are now carrying a deductible of $1,000 or more. Perhaps more telling, 7% of auto insurance customers say they avoided filing a claim entirely out of fear their rates would rise — meaning some drivers with legitimate losses are absorbing those costs out of pocket rather than using the coverage they’re paying for.
The lesson is not that high deductibles are inherently bad. It’s that a deductible should be a deliberate financial choice, not a default response to a high premium. If you’re carrying a $1,000 deductible and don’t have $1,000 accessible in savings, you are underinsured in a practical sense even if your policy is technically active.
How to choose the right deductible for your situation
The right deductible is the highest amount you could comfortably pay out of pocket at short notice without financial hardship. That number is different for every driver.
Several additional factors should inform the decision:
Your driving record and environment. “If you have a history of tickets and accidents, having a higher deductible might help you manage costs,” says Rajni Kapur, president of All Solutions Insurance in Moreno Valley, California. Drivers with clean records who rarely file claims tend to benefit more from a higher deductible over time.
Your vehicle’s value. A high deductible on a low-value car is rarely justified. If your car is worth $4,000 and you carry a $1,500 deductible, a serious accident could result in a total loss payout that barely exceeds your deductible after depreciation is factored in.
Lender or lessor requirements. “If you have a car that is being financed, finance companies might not let you have a deductible higher than a certain amount,” Kapur says. Check your loan or lease agreement before changing your deductible — some lenders cap the maximum deductible at $500 or $1,000.
The “is it better to have $500 or $1,000” question. If you have a stable financial situation and a clean driving record, a $1,000 deductible is typically the better value — the premium savings are real and the out-of-pocket risk is manageable. If you drive frequently, drive in high-risk areas, or prefer predictable costs, $500 is the more conservative and often more practical choice.
How much you can save by raising your deductible: savings by state
The premium savings from raising your deductible vary considerably by state. States with higher base premiums and more complex risk profiles tend to show larger absolute savings; states with tighter regulatory environments or lower base rates show smaller ones.
States with the largest percentage savings by raising from $250 to $1,000: South Dakota (29%), Wyoming (29%), Montana (24%), North Dakota (24%).
States with the smallest percentage savings: Florida (9%), New Jersey (10%), Nevada (11%), North Carolina (12%).
The table below shows savings at three deductible levels for all 50 states and Washington, D.C.
| State | Full coverage car insurance cost with $250 deductible | Full coverage car insurance cost with $500 deductible | Savings by increasing deductible from $250 to $500 | % savings by increasing deductible from $250 to $500 | Full coverage car insurance cost with $1000 deductible | Savings by increasing deductible from $500 to $1,000 | % savings by increasing deductible from $500 to $1,000 | Savings by increasing deductible from $250 to $1,000 | % Savings by increasing deductible from $250 to $1,000 |
|---|---|---|---|---|---|---|---|---|---|
| Alaska | $1,847 | $1,676 | $171 | 9% | $1,481 | $195 | 12% | $366 | 20% |
| Alabama | $1,991 | $1,860 | $103 | 5% | $1,700 | $160 | 9% | $291 | 15% |
| Arkansas | $2,164 | $1,957 | $152 | 7% | $1,747 | $210 | 11% | $417 | 19% |
| Arizona | $1,956 | $1,812 | $122 | 6% | $1,644 | $168 | 9% | $312 | 16% |
| California | $2,584 | $2,416 | $142 | 5% | $2,147 | $269 | 11% | $437 | 17% |
| Colorado | $2,556 | $2,337 | $192 | 8% | $2,125 | $212 | 9% | $431 | 17% |
| Connecticut | $1,852 | $1,725 | $102 | 6% | $1,589 | $136 | 8% | $263 | 14% |
| Washington, D.C. | $2,334 | $2,157 | $154 | 7% | $1,858 | $299 | 14% | $476 | 20% |
| Delaware | $2,207 | $2,063 | $114 | 5% | $1,875 | $188 | 9% | $332 | 15% |
| Florida | $2,824 | $2,694 | $144 | 5% | $2,579 | $115 | 4% | $245 | 9% |
| Georgia | $2,127 | $1,970 | $121 | 6% | $1,815 | $155 | 8% | $312 | 15% |
| Hawaii | $1,658 | $1,517 | $119 | 7% | $1,351 | $166 | 11% | $306 | 18% |
| Iowa | $1,836 | $1,630 | $146 | 8% | $1,406 | $224 | 14% | $430 | 23% |
| Idaho | $1,583 | $1,428 | $104 | 7% | $1,276 | $152 | 11% | $307 | 19% |
| Illinois | $1,694 | $1,532 | $138 | 8% | $1,353 | $179 | 12% | $341 | 20% |
| Indiana | $1,665 | $1,515 | $120 | 7% | $1,340 | $175 | 12% | $324 | 19% |
| Kansas | $2,116 | $1,900 | $162 | 8% | $1,654 | $246 | 13% | $462 | 22% |
| Kentucky | $2,390 | $2,228 | $127 | 5% | $2,039 | $189 | 8% | $352 | 15% |
| Louisiana | $3,140 | $2,883 | $267 | 9% | $2,588 | $295 | 10% | $552 | 18% |
| Massachusetts | $1,858 | $1,726 | $132 | 7% | $1,477 | $249 | 14% | $381 | 21% |
| Maryland | $1,879 | $1,746 | $147 | 8% | $1,581 | $165 | 9% | $299 | 16% |
| Maine | $1,308 | $1,175 | $113 | 9% | $1,043 | $132 | 11% | $265 | 20% |
| Michigan | $2,592 | $2,352 | $413 | 16% | $2,091 | $261 | 11% | $501 | 19% |
| Minnesota | $2,107 | $1,911 | $165 | 8% | $1,708 | $203 | 11% | $399 | 19% |
| Missouri | $2,223 | $1,982 | $259 | 12% | $1,732 | $250 | 13% | $490 | 22% |
| Mississippi | $2,156 | $2,008 | $99 | 5% | $1,837 | $171 | 8% | $319 | 15% |
| Montana | $2,482 | $2,193 | $235 | 9% | $1,882 | $311 | 14% | $601 | 24% |
| North Carolina | $1,840 | $1,741 | $78 | 4% | $1,620 | $121 | 7% | $220 | 12% |
| North Dakota | $1,881 | $1,665 | $150 | 8% | $1,424 | $241 | 14% | $457 | 24% |
| Nebraska | $2,189 | $1,902 | $271 | 12% | $1,615 | $287 | 15% | $573 | 26% |
| New Hampshire | $1,410 | $1,265 | $106 | 8% | $1,142 | $123 | 10% | $269 | 19% |
| New Jersey | $1,986 | $1,902 | $98 | 5% | $1,793 | $109 | 6% | $193 | 10% |
| New Mexico | $2,250 | $2,049 | $166 | 7% | $1,840 | $209 | 10% | $410 | 18% |
| Nevada | $2,173 | $2,060 | $126 | 6% | $1,942 | $118 | 6% | $231 | 11% |
| New York | $2,015 | $1,870 | $142 | 7% | $1,703 | $167 | 9% | $312 | 16% |
| Ohio | $1,558 | $1,417 | $106 | 7% | $1,239 | $178 | 13% | $319 | 20% |
| Oklahoma | $2,422 | $2,138 | $246 | 10% | $1,883 | $255 | 12% | $538 | 22% |
| Oregon | $1,799 | $1,678 | $103 | 6% | $1,559 | $119 | 7% | $239 | 13% |
| Pennsylvania | $2,061 | $1,872 | $126 | 6% | $1,634 | $238 | 13% | $427 | 21% |
| Rhode Island | $2,220 | $2,061 | $130 | 6% | $1,864 | $197 | 10% | $357 | 16% |
| South Carolina | $2,145 | $2,009 | $113 | 5% | $1,843 | $166 | 8% | $302 | 14% |
| South Dakota | $2,618 | $2,280 | $226 | 9% | $1,856 | $424 | 19% | $762 | 29% |
| Tennessee | $1,828 | $1,677 | $109 | 6% | $1,491 | $186 | 11% | $337 | 18% |
| Texas | $2,251 | $2,043 | $189 | 8% | $1,835 | $208 | 10% | $417 | 19% |
| Utah | $2,013 | $1,825 | $187 | 9% | $1,647 | $178 | 10% | $365 | 18% |
| Virginia | $1,630 | $1,469 | $124 | 8% | $1,321 | $148 | 10% | $309 | 19% |
| Vermont | $1,450 | $1,319 | $99 | 7% | $1,179 | $140 | 11% | $271 | 19% |
| Washington | $1,719 | $1,608 | $90 | 5% | $1,494 | $114 | 7% | $225 | 13% |
| Wisconsin | $1,858 | $1,664 | $176 | 9% | $1,445 | $219 | 13% | $413 | 22% |
| West Virginia | $2,228 | $2,005 | $154 | 7% | $1,756 | $249 | 12% | $472 | 21% |
| Wyoming | $2,006 | $1,758 | $237 | 12% | $1,430 | $328 | 19% | $577 | 29% |
How to avoid paying your deductible
There are a few legitimate scenarios where you may not have to pay your deductible at all:
The other driver is at fault and insured. If another driver caused the accident and their liability coverage pays for your damages, you typically do not owe your deductible. You are filing against their policy, not yours.
You have a collision deductible waiver. Some policies include a waiver of deductible provision that eliminates your out-of-pocket cost if the at-fault driver is uninsured. Confirm whether your policy includes this before assuming it applies.
The damage is below your deductible. If repair costs are less than your deductible, you pay the full repair cost yourself and don’t involve your insurer at all. Filing a claim for an amount below or barely above your deductible is usually not worth it — the claim stays on your record and can affect your rates at renewal.
Your insurer offers a zero-deductible option. Some carriers offer $0 deductible plans for comprehensive or collision, though this will increase your premium. This is worth considering if you consistently file small claims and prefer certainty over savings.
Frequently Asked Questions: Car insurance deductibles
What is a car insurance deductible and how does it work?
A car insurance deductible is the amount you pay out of pocket before your insurer pays the remainder of a covered claim. If your car sustains $2,000 in damage and you have a $500 deductible, you pay $500 and your insurer covers $1,500. Deductibles apply to collision and comprehensive coverages only — not to liability.
Does raising your deductible actually save money?
Yes. Raising your deductible from $500 to $1,000 saves an average of $188 per year nationally, or about 10%, based on CIC’s Quadrant data. The savings are real, but they only make financial sense if you have enough in savings to cover the higher deductible if you need to file a claim. Carrying a deductible you can’t afford to pay defeats the purpose of having coverage.
Is a $500 or $1,000 deductible better?
For drivers with a stable financial situation, clean record, and accessible savings, a $1,000 deductible generally offers better value — the premium savings accumulate meaningfully over time and the risk is manageable. A $500 deductible is the better choice if you drive frequently in higher-risk conditions, prefer predictable out-of-pocket costs, or don’t have $1,000 readily available.
Why are so many drivers now carrying high deductibles?
According to the J.D. Power 2025 U.S. Auto Claims Satisfaction Study, 26% of auto insurance customers now carry deductibles of $1,000 or more — up sharply from prior years. The primary driver was the steep premium increases between 2022 and 2024, which pushed many drivers to raise deductibles as a cost-cutting measure. The same study found this has negatively affected satisfaction at claim time, as those drivers face higher out-of-pocket costs when they actually need to file.
Can I change my deductible after an accident?
You can change your deductible at any time your policy is active, but not retroactively. A deductible change after an accident has occurred will not apply to that pending claim. The new deductible takes effect on future claims only.
Resources & Methodology
Methodology
CarInsurance.com commissioned Quadrant Information Services to get car insurance rates. The rates are based on the sample profiles of 40-year-old male and female drivers carrying full coverage policies with limits of 100/300/100 and $500 collision and comprehensive deductibles. Read the detailed methodology for more information.
Sources
J.D. Power. “Satisfaction with Auto Insurance Claims Strained by Higher Deductibles, More Total Losses, JD Power Finds.” Accessed April 2026.
Still have a question? Ask our experts
Get advice from an experienced insurance professional. Our experts will help you navigate your insurance questions with clarity and confidence.
Browse all FAQs
