What Is a Good Deductible for Car Insurance?

A good deductible balances three factors:

1. Affordability: Can you pay this amount immediately after an accident? If your car is damaged and you need repairs to get to work, you can't wait weeks to gather the money.

2. Premium savings: Higher deductibles lower your premium. The difference can be $200-$500+ annually between a $250 and $1,000 deductible.

3. Claims likelihood: How likely are you to file a claim? If you drive 50,000 miles a year in city traffic, you face higher risk than someone driving 5,000 miles annually in rural areas.

A "good" deductible for a college student with $500 in savings looks very different from one for a high-income professional with a six-month emergency fund.

Standard Deductible Options

Most insurers offer these common deductible amounts:

• $250: Lowest out-of-pocket cost, highest premiums
• $500: Middle ground—most popular option
• $1,000: Lower premiums, manageable for many
• $1,500-$2,000: Significantly lower premiums, higher risk
• $2,500+: Maximum premium savings, only for strong financial cushion

Comprehensive vs. collision deductibles: You can choose different deductibles for comprehensive (theft, weather, vandalism) and collision (accidents). Many drivers select a lower comprehensive deductible since comprehensive claims often involve unavoidable incidents like hail damage or deer strikes.

How Much Does Your Deductible Affect Your Premium?

The premium difference varies by carrier, location, and coverage, but here's a typical example:

• $250 deductible: $1,500/year
• $500 deductible: $1,300/year (save $200)
• $1,000 deductible: $1,100/year (save $400)
• $2,000 deductible: $950/year (save $550)

Break-even analysis: If raising your deductible from $500 to $1,000 saves you $300 annually, you break even after 1.7 years without a claim ($500 extra deductible ÷ $300 annual savings). If you go claim-free for two years, you come out ahead.

The longer you go without filing claims, the more you benefit from higher deductibles. But one accident resets that calculation.

Choosing Based on Your Financial Situation

Emergency savings test: Ask yourself: "If my car were damaged tomorrow, could I immediately pay $X and still cover rent, food, and bills?"

• $500 or less in savings: Stick with $250-$500 deductible
• $1,000-$3,000 in savings: $500-$1,000 deductible is reasonable
• $5,000+ emergency fund: Consider $1,000-$2,000 deductible
• Strong financial cushion: $2,000+ deductible maximizes savings

Income stability matters: If you have irregular income (freelancer, seasonal work, commission-based), a lower deductible provides predictability. If you have steady income and savings, higher deductibles make sense.

Household budgets: If you're supporting a family on a tight budget, a $1,000 surprise expense could derail your finances. A higher premium with a lower deductible might be worth the peace of mind.

Choosing Based on Your Vehicle

Vehicle value matters:

• High-value cars ($30,000+): Repair costs are higher, so you're more likely to file claims. A moderate deductible ($500-$1,000) makes sense.
• Older, lower-value cars: If your car is worth $5,000, a $2,000 deductible doesn't make sense—you'd only receive $3,000 after a total loss. Consider dropping collision/comprehensive or using a $500 deductible.
• Leased or financed: Lenders typically require collision and comprehensive coverage, but you control the deductible. Balance required coverage with affordability.

Repair cost consideration: Luxury and imported vehicles have expensive parts. A minor fender-bender on a BMW might cost $3,000; the same damage on a Honda might be $1,500. Higher repair costs justify more careful deductible selection.

Choosing Based on Your Driving Profile

High-risk drivers: If you have accidents or violations on your record, you're statistically more likely to file claims. A lower deductible reduces your financial exposure.

Low-mileage drivers: Drive less than 7,500 miles per year? Your accident risk is lower. A higher deductible could save money with minimal added risk.

Long commuters: Commuting 30+ miles daily in heavy traffic increases accident likelihood. A lower deductible provides a safety net.

Safe drivers with clean records: If you haven't filed a claim in 5+ years, a higher deductible rewards your low-risk profile with premium savings.

New drivers: Teen and newly licensed drivers have higher accident rates. While their premiums are already high, a lower deductible protects against likely claims.

The "Six-Month Rule" Test

A practical guideline: Choose a deductible you could save in six months from your premium savings.

Example: Raising your deductible from $500 to $1,000 saves $300/year ($25/month). In six months, you save $150—less than the $500 extra deductible. This suggests the $500 deductible is safer.

But if you go two years without a claim, you save $600—more than covering the extra $500 risk. The longer your claim-free period, the better high deductibles perform.

Psychological factor: Some people sleep better with lower out-of-pocket exposure, even if it costs more long-term. There's value in peace of mind.

Common Deductible Mistakes

1. Choosing the lowest deductible by default: Many drivers stick with $250 or $500 without considering whether they'd benefit from higher deductibles and lower premiums.

2. Setting deductibles too high: Stretching to a $2,000 deductible to save $40/month isn't worth it if you'd have to put repairs on a credit card at 20% interest.

3. Forgetting to adjust deductibles: Your financial situation changes. If you've built an emergency fund, consider raising your deductible. If you've hit a rough patch, temporarily lowering it might be wise.

4. Not comparing total cost: Don't just look at premium savings. Calculate: (Annual premium savings) × (Years until likely claim) vs. (Additional deductible amount).

5. Same deductible for comprehensive and collision: Comprehensive claims (theft, weather) are often unavoidable, while collision claims involve your driving. You can choose a lower comprehensive deductible and higher collision deductible.

When to Reconsider Your Deductible

Review your deductible annually or when:

• Your emergency fund changes: Built up savings? Consider raising your deductible.
• Your car's value drops: Older cars may not justify low deductibles if repair costs approach the car's value.
• Your driving patterns change: New long commute? Consider lowering your deductible. Retired and driving less? Raise it.
• Premium increases: If your rates jump, a higher deductible can offset the increase.
• You've had claims: After filing claims, your premiums rise. Adjusting your deductible can help manage costs.

For more on how deductibles work and when you pay them, see our full guide to car insurance deductibles explained.

Frequently Asked Questions