Higher or lower car insurance deductible? A Baton Rouge Body Shop’s opinion

Editor's note: This post was originally published on May 3, 2016 and has been updated for accuracy and relevance.

One of the many decisions every motorist has to make when choosing their car insurance is how high of a deductible they want to pay. Some motorists view the deductible as an imaginary number that they will never have to worry about, but that couldn’t be further from the truth. A few lucky people may go their entire driving life without any incident, but for most of us, there will be a time where a repair will have to be made and we are left debating if we need a higher or lower car insurance deductible. 

Put simply, a deductible is the amount of money you have to pay out of pocket before the insurance company starts paying for what they promise to cover. This applies to much more than just fender benders. This is any situation where damage is done to your car and you need to file a claim with your insurance company. It is important to note that we are talking about comprehensive coverage and not just liability, which means there are many more factors to consider than just who is at fault in an accident. If a neighborhood kid crashes their bicycle into your rear bumper, or your lawnmower kicks a few rocks into your windshield, or a branch falls from a tree onto your car’s roof; these are all scenarios where a claim may need to be filed.

If you have a high deductible, you may opt to just pay for the damages out of pocket and not bother with the insurance company. If you do this, the amount paid against your deductible remains at zero, so the next time something happens the money you paid last time doesn’t count towards getting the insurance company to write a check. This and many other factors need to be considered in order to help determine your ideal deductible. So, we have compiled 5 questions to help you determine which deductible route suits you best.

How much can you afford per month?

Obviously, if you can’t afford your monthly premium, you can’t afford car insurance. So the first thing to determine is how much you can afford to pay every month for your car insurance. You want to be generous in budgeting this number, as all the other factors in the equation are affected by it. By allocating as much as you can to your premium, you give yourself more leeway on the deductible side.

How much can you afford at once?

If something were to happen to your vehicle, whether that be an accident with another vehicle, a single car accident, or a baseball going through your windshield, you are going to need some money on hand to pay for it. Not to oversimplify, but this is basically your cash on hand. If you had to write a check this very second to pay your deductible, how much could you cover? If you are living paycheck to paycheck, this number will be very low. If you have a decent amount saved, you have more room to use as a deductible, but how much are you willing to part with?

How much is your car worth?

You never want to have a deductible that would cost you more than replacing the car you drive. If you are ever in a situation where that is the case, the car will likely be totaled. But what about the times when the damages get close to that number without exceeding it? Let’s say you have a car that is worth $5000 and an insurance deductible of $2000. If you were to find yourself in a situation where needed $1800 worth of repairs, would you want to invest 36% of your car’s value into getting it fixed?

What kind of “off-sets” are being offered?

Some insurance companies offer a rewards program. You have likely heard of “vanishing deductibles,” “safe driving discounts,” or some similar programs. More often than not, these programs cost the insurer more in the long run, but they are examples of off-sets that are offered to reward customers for being good drivers. While we don’t always advise taking part in these programs, it is advisable to learn as much as you ca about them, as they may tip the scale in one direction or the other when determining your premium versus deductible comfort level.

Where does your car spend most of its time?

This is all about exposure to potential damage. The more you rely on your car, the more it will be exposed to problems. If you are someone who has to drive a lot, spends more time in heavy traffic, has to park in busy parking lots, or park along the street; there is an increased likelihood that something will happen to your vehicle at some point. The more likely it is that something will happen, the lower you will want your deductible to be.

While everyone’s situation is different, we at Medines Collision find that more often than not, opting for a lower deductible is the smart choice. A higher deductible leaves the customer on the hook for more out of pocket expenses. It also reduces the likelihood that a claim even gets filed, as most incidents are smaller and aren’t worth the headache of involving the insurance company. This means that the insurance you pay for never even enters the process when something goes wrong. We have also found that the monthly savings on the premium is rarely worth the difference when faced with having to pay a deductible.