A car insurance deductible is what you pay “out of pocket” on a claim before your insurance covers the rest. Collision protection, all-risk, coverage for uninsured and personal injury drivers typically have an auto insurance deductible. You can generally choose between a low deductible and a high deductible. A low deductible means a higher insurance rate, while a high deductible means a lower insurance rate.
For example, after an at-fault accident in Ohio, average auto insurance premiums increase by approximately 39 percent. Fortunately for Ohio drivers, car insurance rates are significantly lower than what the average American driver pays. In some situations, you may have to use your own collision insurance to repair your vehicle while insurance adjusters determine who is at fault. That said, our research indicates that some of the state's cheapest auto insurance companies include Erie, State Farm, and USAA.
Your credit history, or credit-based insurance rating, is one of the variables used by car insurance companies to help them determine risk levels for drivers. Young drivers typically pay some of the highest average car insurance rates because they have the least amount of driving experience and a high frequency of accidents. You can opt for a higher car insurance deductible because you're betting against having an accident, but if you've had accidents in the past and drive often on higher-traffic roads, you're more likely to file a claim and pay a deductible. Once you turn 25, car insurance rates generally start to drop, as long as you maintain a clean driving record.
You can choose to take out your own collision insurance to repair your car while fault is determined. In addition, your insurance company may exempt you from the deductible for comprehensive insurance if it's a glass repair claim. When you buy an auto insurance policy for the first time, and each time the policy is renewed, your insurance company will likely review your driving record. Otherwise, if you file a car insurance claim with a type of coverage that has a deductible, you'll have to pay it.
But what is a car insurance deductible and how does it work? A deductible is generally the amount you must pay when a covered loss occurs. If your car insurance deductible is greater than the cost of damage to your vehicle, you'll pay the full cost out of your pocket, since the insurer only covers damages that exceed the amount of the deductible.