How Car Insurance Deductibles Work (and How to Pick Yours)

Car insurance is getting cheaper, which almost nothing written in the last two years will tell you.

The Bureau of Labor Statistics Consumer Price Index for August 2026 shows the motor vehicle insurance index down 5.1 percent over twelve months, and down 0.8 percent in August alone after falling 0.3 percent in July. Set that against the peak: for the twelve months ending April 2024, motor vehicle insurance rose 22.6 percent, making it one of the most inflationary lines in the entire index.

The series has turned. If you last shopped your policy during the spike and concluded there was no point, that conclusion is out of date, and this is a reasonable moment to reconsider the deductible you set while everything was expensive.

What a deductible is, and the half of your policy it never touches

The National Association of Insurance Commissioners defines it simply: the amount you have to pay out of pocket on a claim before the policy pays the loss.

It attaches to your own losses. Collision coverage pays for damage to your car from hitting another car, an object or a pothole, or from flipping over. Comprehensive pays for damage that is not a collision, including theft, hail, windstorm, flood, fire and hitting animals. Both carry deductibles.

Liability coverage does not. The Texas Department of Insurance states the practical version: you do not have to pay a deductible for claims against another driver’s insurance company. The logic is straightforward once seen. A deductible is the share you retain of your own loss. Liability pays a third party for harm you caused, and there is nothing of yours to retain in a payment made to someone else.

The situation where this bites

Here is the case that surprises people, and it is common.

Another driver hits you and is clearly at fault. If you claim against their insurer, no deductible applies. If instead you claim on your own collision coverage, because it is faster or because their insurer is disputing fault, you pay your deductible. You get it back only if your insurer successfully recovers from theirs, which is not guaranteed and is not quick.

The deductible you choose is therefore not only a bet on your own driving. It is also the amount you may have to front when someone else damages your car.

What people actually pay

The NAIC’s Auto Insurance Database is the primary source here. For data year 2023, published in 2025 and 2026:

Expenditure is lower than the sum of the premiums because not every insured vehicle carries collision and comprehensive. The NAIC computes expenditure across all liability car-years, which makes it the better figure for “what a typical driver spends.”

Bear in mind those are 2023 figures published with a lag, and the CPI has since turned negative. State spread is enormous: the Insurance Information Institute, citing the same NAIC series, puts Florida highest at 1,865 dollars and North Dakota lowest at 691.77 dollars for 2023.

The savings figure everyone quotes, examined

You will read that raising your deductible from 200 to 500 dollars cuts collision and comprehensive costs by 15 to 30 percent, and that going to 1,000 dollars saves 40 percent or more. That text comes from the Insurance Information Institute, an industry body, and it is reproduced on many state insurance department websites.

Read it with three things in mind. The page carries no publication date. It gives no data source and no methodology for the percentages. And the 200 dollar baseline is anachronistic, since few insurers still write a 200 dollar auto deductible at all.

The Institute’s own separate page on understanding deductibles is notably more cautious and gives no percentage whatsoever, saying only that increasing the deductible can reduce costs and that going to 1,000 dollars may save more. Neither the NAIC nor any state insurance department we could find publishes a measured figure.

So treat 15 to 30 percent as an illustrative rule of thumb of unknown vintage, not a finding. The number that matters is the one your own insurer quotes you for your own car, and it costs nothing to ask for the same policy at two or three deductible levels.

The arithmetic nobody publishes

Since no authority does this, here it is. Raising your deductible from 500 to 1,000 dollars means accepting 500 dollars more risk per claim in exchange for a lower premium. The break-even is simply the extra risk divided by the annual saving:

Now set that against how often claims actually happen. The Insurance Information Institute, using ISO data for 2024, puts collision claim frequency at 4.16 percent and comprehensive at 3.95 percent. Those are claims per 100 insured vehicle-years, which works out to roughly one collision claim every 24 years per vehicle and one comprehensive claim every 25.

The conclusion is uncomfortable for the cautious: on expected value, the higher deductible wins at almost any plausible saving. Even a 25 dollar annual reduction breaks even in 20 years against a claim that arrives, on average, every 24.

Which is exactly why the NAIC pairs its guidance the way it does. Higher deductibles mean lower premiums, and make sure you can afford the deductible in case you have a loss. The arithmetic says take the higher deductible. The second half of that sentence is the reason many people should not, and it is not about mathematics. A 1,000 dollar deductible you cannot produce on the day is not a saving; it is a car you cannot repair.

The honest rule: set the deductible at the largest amount you could hand over tomorrow without borrowing. Then bank the premium difference rather than spending it, which converts the bet into something you have actually funded.

Collision and comprehensive are different bets

Most people set both deductibles to the same number without thinking about it. The claim data suggests they should not.

Using the Institute’s 2024 figures, average collision claim severity is 5,489 dollars, while average comprehensive severity is 2,306 dollars. A 1,000 dollar deductible is about 18 percent of a typical collision claim and about 43 percent of a typical comprehensive one.

The deductible eats a far larger share of the comprehensive claim. If you are going to carry different numbers, the case for a lower deductible is stronger on comprehensive, where hail and theft produce smaller losses that a high deductible can swallow almost entirely.

Glass, where three states step in

Three states have statutes eliminating the deductible on glass claims, and the details differ.

Florida, under a long-standing statute, provides that deductible provisions in a motor vehicle policy with comprehensive or combined additional coverage do not apply to damage to the windshield. Note it covers the windshield specifically, not all glass, and the provision is a recurring target for amendment, so check the current year.

South Carolina waives the deductible on glass claims where you carry comprehensive coverage. The state Department of Insurance frames it in a way worth quoting to anyone who thinks they are getting something free: there is no free glass coverage in South Carolina. You must be paying for comprehensive for the waiver to exist.

Kentucky rewrote its law in 2024, applying to policies issued or renewed on or after 2 April 2024. Policies with comprehensive coverage must provide complete coverage for repair or replacement of damaged vehicle glass without regard to any deductible on glass-only claims. Two additions deserve more attention than they get: insurers may not require you to use a particular glass shop as a condition of benefits, and the coverage expressly extends to calibration of advanced driver assistance systems when glass is replaced. On a modern car with cameras mounted behind the windshield, that calibration is a real and often surprising cost.

The common thread in all three: the waiver only operates if you carry comprehensive. Drop it to save money and there is nothing left to waive.

What filing costs you afterwards

The Texas Department of Insurance states that home and auto premiums can go up if you file claims, and that you could lose claim-free discounts. Claims the insurer denies generally do not trigger increases.

It follows you between insurers through the Comprehensive Loss Underwriting Exchange, which shows claims filed for any house or car for the past seven years. The NAIC notes that insurers report auto claims to private nationwide databases and that claim frequency often affects both your premium and whether your insurer renews you at all. Because the exchange is listed by the Consumer Financial Protection Bureau as a consumer reporting company, you have a right to your own file and to dispute errors in it, with one free copy annually.

That is the hidden second cost of a small claim, and it is the real argument for a higher deductible: it makes small claims uneconomic to file, which protects the record as well as the premium.

What to do, in order

1. Reshop the policy now. The index has fallen 5.1 percent over the past year after rising 22.6 percent at its peak, so quotes from the spike are stale.
2. Ask for the same coverage at three deductible levels rather than trusting any published savings percentage.
3. Run the break-even using the table above with the real numbers you are quoted.
4. Set the deductible at the most you could pay tomorrow without borrowing, and no higher, whatever the arithmetic suggests.
5. Consider a lower comprehensive deductible than collision, since the deductible consumes a much larger share of a typical comprehensive claim.
6. Bank the premium difference so the deductible is funded rather than theoretical.

The thing worth sitting with is that the expected-value answer and the practical answer point in opposite directions for a lot of households. A claim arrives roughly once every twenty-four years, which makes almost any premium saving worth taking. It also means that when the claim does come, it will arrive on a day you did not plan for, and the arithmetic will be no help at all in producing a thousand dollars by Friday.

Where these figures come from

• Bureau of Labor Statistics, Consumer Price Index, August 2026, and the April 2024 release
• National Association of Insurance Commissioners, A Consumer’s Guide to Auto Insurance, 2022, and the Auto Insurance Database Report and Average Premium Supplement for data year 2023
• Texas Department of Insurance, Auto Insurance Guide; Will my premium go up if I file a claim; How to get a CLUE about your claims history
• Insurance Information Institute, Facts and Statistics: Auto insurance, using ISO data for 2024; Nine ways to lower your auto insurance costs; Understanding your insurance deductibles
• Florida Statutes section 627.7288; South Carolina Code section 38-77-280 and South Carolina Department of Insurance guidance; Kentucky Revised Statutes 304.20-060 as amended in 2024
• Consumer Financial Protection Bureau, List of Consumer Reporting Companies

General information, current as of September 2026, and not personalised insurance advice. Coverage rules and statutes differ by state and change; check your own state insurance department and your policy before acting.