Demystifying Deductibles: How Your Insurance Policy Impacts Car Collision Costs

Car collisions are unexpected, unfortunate events that can have a significant impact on your life and finances. When you're involved in an accident, your car insurance policy plays a crucial role in determining how much you'll pay out of pocket to get your vehicle repaired. A key aspect of understanding your car insurance in this context is the deductible. In this blog post, we'll demystify deductibles and explain how your insurance policy impacts car collision costs.

What Is a Deductible?

A deductible is the amount of money you are responsible for paying before your car insurance policy kicks in to cover the remaining costs of a claim. For example, if your deductible is $500, and the total repair cost for your vehicle after a collision is $5,000, you will need to pay $500, and your insurance will cover the remaining $4,500.

Deductibles are a common feature in various types of insurance policies, including health, homeowners, and, of course, car insurance. They serve several purposes, such as reducing the number of small claims an insurance company has to process and providing a financial commitment from policyholders to prevent misuse of the insurance.

How Deductibles Work in Car Insurance

In car insurance, deductibles are typically applied to collision and comprehensive coverage. Here's how they work for each:

  • Collision Coverage Deductibles: If you have collision coverage, your deductible applies when your vehicle is damaged in a collision, regardless of who is at fault. If the repair cost is less than your deductible, you will need to pay the entire amount. If it's more, you pay the deductible, and your insurance covers the rest.
  • Comprehensive Coverage Deductibles: For comprehensive coverage, which covers non-collision-related damage like theft, vandalism, or weather-related damage, the same principle applies. You pay the deductible, and your insurance covers the remainder of the cost.

Choosing Your Deductible

When you purchase car insurance, you typically have the option to choose your deductible amount. Common deductible options range from $250 to $2,000 or more. The choice you make can have a significant impact on your insurance premiums and how much you'll pay out of pocket after a collision.

Low Deductibles


  • Lower out-of-pocket expenses in the event of a claim.


  • Higher monthly or annual insurance premiums.
  • May not be cost-effective if you have an accident-free history and rarely make claims.

High Deductibles


  • Lower monthly or annual insurance premiums.


  • Higher out-of-pocket expenses in the event of a claim.

Selecting a deductible is about finding the right balance between what you can afford to pay if an accident occurs and what you're willing to pay in monthly insurance premiums. If you have a low deductible, you'll pay more each month but less when you file a claim. Conversely, a high deductible will reduce your monthly premium but increase your costs when you need to make a claim.

Factors to Consider When Choosing a Deductible

  1. Your Budget: Consider how much you can comfortably afford to pay out of pocket in the event of a collision. A deductible should not be a financial burden.
  2. Your Risk Tolerance: If you're a cautious driver with a clean record and have a history of not making claims, you might feel more comfortable with a higher deductible.
  3. The Value of Your Vehicle: If you drive an older vehicle with a lower market value, it may make sense to choose a higher deductible since the repair or replacement cost is lower.
  4. Your Driving Habits: If you frequently drive in high-traffic areas with a greater risk of accidents, a lower deductible might provide peace of mind.
  5. Insurance Premiums: Request quotes from your insurance company with different deductible options to see how they impact your monthly or annual premiums.

How Deductibles Impact Collision Costs

To illustrate how deductibles can impact collision costs, let's consider a hypothetical scenario:

Scenario 1 - Low Deductible:

- Deductible: $250

- Total Repair Cost: $5,000

In this scenario, you would pay the $250 deductible, and your insurance would cover the remaining $4,750. Your out-of-pocket expense is relatively low, but your insurance premiums are likely to be higher.

Scenario 2 - High Deductible

- Deductible: $1,000

- Total Repair Cost: $5,000

With a higher deductible, you would pay the $1,000 deductible, and your insurance would cover the remaining $4,000. Your out-of-pocket expense is higher, but your insurance premiums are lower.

The choice between a low and high deductible is ultimately a personal decision. It depends on your financial situation, risk tolerance, and driving habits. However, it's essential to strike a balance that ensures you can comfortably cover your deductible in the event of a collision.

Changing Your Deductible

If you already have car insurance and want to adjust your deductible, you can typically do so by contacting your insurance company. Keep in mind that changing your deductible may impact your premium and, in some cases, may require you to sign an endorsement or modify your policy.

It's crucial to review your policy thoroughly and understand how a change in your deductible affects your overall coverage and financial responsibilities. Ensure that the new deductible aligns with your financial situation and risk tolerance.

Gosch Collision Can Help With Your After-Collision Insurance Claims

Deductibles are a fundamental aspect of car insurance, and understanding how they work is essential for managing your car collision costs. Your choice of deductible can significantly influence the amount you pay out of pocket when filing a claim. By carefully assessing your budget, risk tolerance, and driving habits, you can make an informed decision about the deductible that best suits your needs. Whether you opt for a low or high deductible, the goal is to have the right balance that provides financial security.

At Gosch Collision, we understand that filing an insurance claim after a collision can be a daunting and overwhelming process. That's why we offer assistance to our customers in navigating their insurance policies and claims. Reach out to us for more information.


Demystifying Deductibles: How Your Insurance Policy Impacts Car Collision Costs - GOScH Collision

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