Choosing a collision deductible

Car wreck at guard railWhen purchasing collision coverage, you must decide what amount you want for your collision deductible. Typically, you can choose from $100 to $2,500, as car insurance deductibles vary by state and by car insurance company guidelines, though most drivers choose between $250 and $1,000.

The amount of your collision deductible equals the amount of money you agree to pay out-of-pocket for repairs to your car when you file a collision claim. Your insurance will pay the difference. For instance, if it costs $1,500 to fix your car, and your collision deductible is $1,000, you’re on the hook for $1,000 and your insurer will pay $500.

If you’re looking to save on your car insurance, one way to lower your rate is by raising your deductibles. Increasing your collision deductible from $200 to $500 can trim collision coverage costs by 15 to 30 percent, while a hike to $1,000 can save you 40 percent or more, according to the Insurance Information Institute, a trade group based in New York.

While high collision deductibles will typically mean lower rates, be sure you have enough money to pay the deductible should you have to file a claim to get your car fixed. Consumer advocates typically recommend a $500 collision deductible unless you have substantial savings on hand.

Deductibles are due per incident, so you will have your deductible amount due each time a collision claim is made.

Collision coverage isn’t always required

Unlike liability insurance, no state requires that you buy collision or comprehensive coverage, so they are optional coverages – but not in all cases.

If you have a loan or lease on your vehicle, your lender typically will require that you purchase these coverages. You usually cannot buy collision coverage without also buying comprehensive.

The cost of collision coverage is determined by the value of your car, your driving record, the deductible you choose and how expensive it is to make repairs on the type of car you drive. Collision coverage, however, is usually not a budget-buster. For example, the annual cost in Florida for collision coverage is $270, on average, according to data commissioned by from Quadrant Information Services.

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.

Collision coverage claims and your car insurance rates

One collision claim may or may not raise your rates, depending on guidelines of your car insurance company. On average, data commissioned from Quadrant Information Services showed an increase from a single collision claim under $1,000 of about 18 percent.

Two collision claims will almost certainly increase your rates. The average increase for a driver with two at-fault property damage claims of $1,000 or more was 99 percent, based on the sample driver used by Quadrant.