What is a collision deductible?

Car wreck at guard railThe collision deductible is the amount you are responsible for out of pocket when you file a collision claim.

When purchasing collision coverage you’ll be asked to choose a deductible. Car insurance deductibles are usually between $250 and $1,000.

Let’s say you file an accident claim for $1,500 in damage to your car. and your collision deductible is $500. Your insurer will pay $1,000. You’ll pay the additional $500.

The higher your deductible, the lower your insurance premiums will be. Increasing your collision deductible from $200 to $500 can trim collision coverage costs by 15 to 30%, while a hike to $1,000 can save you 40% or more, according to the Insurance Information Institute, a trade group based in New York.

When choosing a collision deductible, ensure that you can afford to pay it if you have to file a claim. Consumer advocates typically recommend a $500 collision deductible unless you have enough savings.

Deductibles are per incident, so you will have to pay the deductible every time you file a collision claim.

Is collision coverage required?

Unlike liability insurance, no state requires that you buy collision or comprehensive coverage.

If you have a loan or lease on your vehicle, your lender typically will require that you purchase both coverages.

The cost of collision coverage is determined by factors that include the make and model of your car, your driving record and the deductible you choose. Collision coverage on a high-end car will cost much more than an economy vehicle, since it costs more to repair.

Collision coverage pays to repair or replace your car if you are:

  • At fault in an accident
  • Not at fault in an accident but the other driver is an uninsured motorist
  • Involved in an accident and fault is disputed
  • The victim of a hit-and-run

Collision coverage also allows you to get your insurance company involved on your behalf even when you are not at fault. If you file a claim for damage and pay your collision deductible, the insurance company will seek restitution from the at-fault party, including your deductible, in a process called subrogation.

Collision coverage claims and your car insurance rates

A collision claim may increase your rates. Since collision claims are often for at-fault accidents, you can expect to see an increase on your next renewal. If the claim was not for an at-fault accident, the rate increase will depend on the company’s guidelines and the type of claim.

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Michelle Megna
Contributing Researcher

Michelle is a writer, editor and expert on car insurance and personal finance. She's a former CarInsurance.com editorial director. Prior to joining CarInsurance.com, she reported and edited articles on technology, lifestyle, education and government for magazines, websites and major newspapers, including the New York Daily News.