An auto insurance deductible is the amount a driver pays out of pocket before the insurer covers the rest. Most drivers choose $500, though deductibles range from $100 to $2,000. Lower deductibles raise monthly premiums, while higher deductibles reduce them.  Deductibles only apply to collision and comprehensive coverage. These include theft, fire, hail, or accident damage. Liability coverage does not have a deductible. Your insurer makes direct liability payments to the third party.  According to Bankrate (2025), drivers who have a deductible of $1,000 spend $2,336 annually on full coverage. Drivers who have a deductible of $250 pay $2820. That is a 17.2% cost difference. A higher deductible reduces monthly expenses.  The Insurance Information Institute (2023) reports that only 6% of drivers file a claim each year, while 30% make one or more claims within five years. High deductibles benefit low-risk drivers who rarely claim, but can cost more for high-risk drivers when accidents occur.

What are the Common Deductible Amounts?

Here are three common deductible amounts:
  1. Low Deductible ($100–$500): Drivers are charged higher monthly premiums. The alternative reduces financial liability in a claim. Ideal for high-risk regions or new drivers. Common choice: $500. Regular claim holders enjoy lower out-of-pocket repair expenses.
  2. Medium Deductible ($500–$1,000): This range is a balance between high quality and claim costs. $750 is an average middle ground. Appropriate for average-risk drivers. Makes moderate monthly payments and affordable repair expenses during covered events such as accidents or vandalism.
  3. High Deductible ($1,000+): Drivers pay less for monthly premiums. This alternative transfers additional risk to the policyholder. Suitable for low-risk drivers who are saving. According to Bankrate (2025), a deductible of $1,000 is 17.2% less than a deductible of $250.

What are the Factors to Consider When Choosing a Deductible?

Here are five key factors that affect your deductible decision:
  1. Your Budget: Choose only a deductible that you can pay immediately after an accident. In case you can afford no more than $1,000, select $500. The prevention of out-of-pocket suffering is more important than a few dollars in monthly premiums.
  2. Driving Habits: Metro drivers or everyday commuters are at a greater risk of accidents because of the congestion. A smaller deductible means that you pay less in case you have frequent claims. Drivers with low mileage or rural drivers have a lower risk and can better cover higher deductibles.
  3. Vehicle Value: New cars or expensive vehicles are pricier to fix. The reduced deductible saves you the expense of huge repair bills. In older or worn-out vehicles, a larger deductible is more effective, particularly when repair expenses remain within deductible thresholds.
  4. Claim History: Drivers who have minimal or no prior claims enjoy increased deductibles. They have lower monthly payments and hardly have to file. In case you have made several claims recently, a smaller deductible can reduce repair expenses that you have to pay in the future.
  5. State or Lender Requirements: Certain states or lenders mandate certain deductible amounts, particularly on leased or financed vehicles. A deductible of $500 is the favorite of most lenders. These rules always need to be verified in a lease agreement or insurance policy before making a choice.

When Should You Raise or Lower Your Deductible?

Here are two scenarios when it makes financial sense to adjust your deductible:
  1. Raise Deductible: Increase your deductible in case you wish to lower monthly insurance payments and have sufficient savings to pay the cost of repairs. This suits low-risk drivers. Bankrate (2025) validates that $1,000 deductibles save 17.2% on premiums compared to $250 deductibles.
  2. Lower Deductible: Reduce your deductible when you do a lot of driving, reside in high-accident locations or desire uniform expenses in case of a claim. It assists in minimizing the costs incurred after accidents. Good for urban drivers or delivery workers, or those with a background in claims.

What are the Common Mistakes to Avoid with Deductibles

Here are three common mistakes to avoid with deductibles:
  1. Choosing a high deductible: Choosing a deductible of $1,000 or more reduces monthly payments, but unless you have that in savings, you face severe financial stress in the event of an accident. Always make sure that your savings are equivalent to the deductible you accept to pay.
  2. Keeping a low deductible: It does not make sense to pay a large premium to have a low deductible on a car with a value of less than $2,000. Repair expenses are higher than the value of the vehicle in most instances. Increasing the deductible or eliminating full coverage is cost-effective.
  3. Not reviewing deductible: A deductible review is necessary in life changes such as relocating, purchasing a new automobile, or driving more. Lack of deductible to current needs is a risk or cost. Reevaluate when renewing or making significant life changes.