Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, largely in the insuranc...

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Melanie Musson is the fourth generation in her family to work in the insurance industry. She grew up with insurance talk as part of her everyday conversation and has studied to gain an in-depth knowledge of state-specific car insurance laws and dynamics as well as a broad understanding of how insurance fits into every person’s life, from budgets to coverage levels. She also specializes in automa...

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Reviewed by Melanie Musson
Published Insurance Expert

UPDATED: Mar 13, 2020

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Car insurance is one bill of adult life that is unavoidable. If you own a car, you must pay to have that vehicle insured. Since you cannot cut this expense entirely from your policy, you must find other ways to reduce cost each month. One way to lower your car insurance premiums is to adjust your coverage. By lowering the limits and raising your deductible, you can keep the same basic insurance while saving some money.

Liability and First-Party Coverage

There are two types of auto coverage in most insurance policies: liability and first-party. Liability coverage pays for damage that you are responsible for. First-party coverage pays for damage to your own vehicle. State law requires that you carry liability insurance to pay for damage you cause, but first-party coverage is optional. If you do carry first-party insurance, you will be responsible to pay a deductible before your auto insurance will pay for any damage to your car.

There are two main first-party coverage types. The first is collision, which pays for any damage caused to your vehicle when you collide with a car or fixed object. The second type of coverage is comprehensive, which pays for damage caused to your vehicle from acts of vandalism, natural disaster, animals and other types of non-accident vehicle damage.

Collision and comprehensive coverage can be purchased independently. Depending on what you use your vehicle for, you may not need to carry both types of coverage, and you can save money by dropping one or the other.

What is a Policy Deductible?

A deductible is the amount of damage that you agree to pay out of your own pocket in the event of a claim. Most first-party coverage like collision and comprehensive coverage have a deductible, whereas liability insurance usually does not.

The deductible is owed to the body shop, not to the insurance company. This means that you pay the deductible to the shop at the time repairs are completed. Whenever you receive a payment from your insurance company, the deductible amount will be subtracted from the total amount of the repairs and a check will be made out for the difference. If the damage costs less than your deductible, the claim will be closed without payment.

The higher your deductible, the more damage your vehicle must sustain before a claim can be paid. This means that high-deductible policies are less expensive because the insurance company doesn’t need to pay for as many claims. Of course, if you cannot afford to pay your deductible, you cannot have your vehicle repaired. When raising your deductible, be sure to keep it at a level you can still afford to pay in the event of an accident.

How much can a car insurance deductible cost?

Your deductible can be nearly anything, but some figures are more common than others. The most popular collision deductibles are $250, $500 and $1,000. Comprehensive coverage is usually more affordable and also has a lower deductible; comprehensive coverage with no deductible is fairly common, as are deductibles of $50, $100, $250, $500 or even $1,000.

How do I change my car insurance deductible?

If you decide to change your insurance policy, you can usually make the change online. Most insurance companies have websites you can access to view and change your policy. Usually, they will allow you to see what impact a change will have on your rates before you commit to making that change against your actual policy.

In addition to changing your deductible amount, you can often change your liability limits. Take care when you do this, however, that you keep the limits high enough; you may accidentally lower them below the state requirements in your area. Even if you keep them at the minimum your state requires, it may not be enough to cover damage that you cause. Also be sure to keep your deductible at a reasonable amount. If your deductible is higher than the value of your vehicle, it is probably not worthwhile to continue carrying full coverage insurance on that car.

Some insurance companies do not have an interactive website, or you may not be comfortable changing the policy online. In this case, you can call the insurance company’s customer service number to make policy changes. If you have a local agent, you can also call the agent or stop off at the agent’s office to make policy changes.