What Happens if You Raise Your Car Insurance Deductible
Your premium drops, but you take on more of the cost when something actually happens to the car.
What changes when you raise your deductible
- Your monthly premium drops Insurers charge less when you agree to cover more of the first costs yourself. How much it drops depends on your insurer and your driving history.
- You pay more after a claim If you file a claim for collision or other damage, you'll pay the higher deductible amount before coverage kicks in. Make sure you have that amount set aside before you make the change.
- Small claims may not be worth it With a higher deductible, minor damage may cost less to pay for yourself than to file a claim. Think about whether you'd actually use the coverage at the new level.
- Liability stays unaffected Raising your deductible only affects collision and comprehensive coverage, not the liability portion of your policy. Check your declarations page to confirm which coverages have deductibles.
- You can change it anytime Most insurers let you adjust your deductible outside of renewal, though the new rate may not apply until the next billing cycle. Ask your insurer when the change actually takes effect.
How do you pick the right deductible amount?
The right amount is whatever you could pay today, in full, without it being a problem. That's the real test, not the lowest premium or the highest savings on paper.
Start by looking at what you have set aside for unexpected costs. If a sudden repair bill would strain your finances or force you to borrow, a lower deductible is worth the higher premium because it protects you from that moment. If you have money set aside and rarely file claims, a higher deductible can save you money year after year with little downside.
It also helps to think about the car itself. An older car worth little may not need low deductibles on comprehensive or collision at all, since the payout in a total loss could be small. A newer or financed car usually needs more protection, since the lender may require certain coverage levels regardless of your preference. Check your loan terms if you're financing, since they may set a limit on how high you can go.
Once you know what deductible you can comfortably cover, compare quotes to see how much raising it actually saves you.
Choosing whether to raise your deductible
If you do
Your premium goes down right away or at renewal. If you're in an accident or file a comprehensive claim, you'll owe the higher deductible amount before your insurer pays anything. Keep that amount accessible, in savings, not tied up, so a claim doesn't become a financial problem on top of a damaged car.
If you don't
Your premium stays where it is, and you keep a lower out of pocket cost if something happens. You'll pay more over time if you rarely file claims, since you're effectively paying for protection you may not use. Review it again at your next renewal if your savings situation changes.
Deciding on a deductible after paying off a car
A driver had been paying a loan on her car for several years, and the lender had required a low deductible the whole time. Once the car was paid off, she no longer had that requirement, and she started wondering whether the low deductible still made sense. She had a repair fund set aside for the house and realized she could use part of that same cushion for a car repair if she ever needed to.
She called her insurer and asked what her premium would look like at a higher deductible, and compared it against how much she'd pay out of pocket if she filed one claim a few years from now. The savings on her monthly premium added up to more than the difference in the deductible itself over a couple of years, so she raised it. She kept a note in her budget reminding her what amount she'd need to cover if she ever filed a claim, so the number never came as a surprise.
Why the deductible works this way
A deductible is the line between what you absorb yourself and what the insurer absorbs. Insurers price your policy partly on how much risk they're taking on per claim. When you agree to cover more of that risk upfront, they lower what they charge you to carry the policy, because their expected payout on any given claim is smaller.
This is why raising your deductible doesn't change your liability coverage, which pays for damage or injury you cause to others. Liability doesn't typically have a deductible, since it's regulated differently and tied to legal requirements rather than your own vehicle's value. The deductible applies specifically to collision and comprehensive coverage, the parts that pay for your own car.
The savings from a higher deductible also depend on how often you expect to file claims. If you drive in heavy traffic, park on the street, or have teen drivers on your policy, the odds of a claim go up, and a low deductible may be worth the extra premium. If your driving record is clean and your circumstances are stable, a higher deductible tends to save money over time simply because you're less likely to need the coverage.
Where this changes is with financing. Lenders often set a maximum deductible as a condition of the loan, since they have an interest in making sure the car can be repaired or replaced without you walking away from the payments. Always check your loan agreement before changing your deductible if the car isn't paid off.
