Zero-Deductible Car Insurance: Explained Simply
Zero deductible car insurance allows drivers to trade higher monthly rates for no deductible. Zero deductible car insurance is only applicable for collision and comprehensive coverage.
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Brad Larson
Licensed Insurance Agent
Brad Larson has been in the insurance industry for over 16 years. He specializes in helping clients navigate the claims process, with a particular emphasis on coverage analysis. He received his bachelor’s degree from the University of Utah in Political Science. He also holds an Associate in Claims (AIC) and Associate in General Insurance (AINS) designations, as well as a Utah Property and Casual...
Licensed Insurance Agent
UPDATED: Oct 13, 2024
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Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.
UPDATED: Oct 13, 2024
It’s all about you. We want to help you make the right coverage choices.
Advertiser Disclosure: We strive to help you make confident car insurance decisions. Comparison shopping should be easy. We are not affiliated with any one car insurance company and cannot guarantee quotes from any single company.
Our partnerships don’t influence our content. Our opinions are our own. To compare quotes from top car companies please enter your ZIP code above to use the free quote tool. The more quotes you compare, the more chances to save.
On This Page
Your insurance company might offer a zero deductible option for certain coverages in some limited situations. However, for the basic auto liability policy that every driver is required to have, a deductible really does not apply to your coverage in any event.
A deductible comes into play for your comprehensive and collision coverage, which helps to cover physical damage to your car.
It does not include any coverage for personal injuries from any accident involving your car.
Most of these policies actually require a deductible so that the insured has some skin in the game when filing a claim.
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- A deductible is a set amount that the policyholder will have to pay out of his own pocket for repairing his car before the insurance company covers the rest of the claim amount
- It may be possible to get certain types of insurance coverages, such as collision and comprehensive coverage, without a deductible
- If you choose to have a zero deductible policy, then you should expect to pay more overall for your car insurance
- A deductible is one way that the car insurance company tries to share the risk with the policyholder so that the insured does not file any unnecessary claims
What is the Point of a Car Insurance Deductible?
A deductible is a way for the insurance company to prevent drivers from making too many claims under their comprehensive and collision coverage for repairs to their cars.
The general idea is that if you have to put out a certain amount of money on your own before filing a car insurance claim, then you will think twice about filing any frivolous claims and having to pay the amount of the deductible out of your own pocket.
Most of the times, the deductible for your car insurance policy will be a set amount that you must pay out of your own pocket before the insurance company picks up the tab for a car repair.
In other situations, the deductible can be set at a certain percentage of the claim.
Most times, when you file a claim under your car insurance policy, the amount of your deductible is simply deducted from the settlement check.
For example, if you have a deductible of $100 and you file a claim for $1,000, you would receive a check for $900 from the insurance company in settlement of your claim. If the deductible was $200, the settlement check would be for $800.
The information in regards to your exact deductible will be set out in your insurance policy agreement.
Look for the amount on the declarations page of your policy.
If you do not have an accessible copy of your insurance policy agreement, your insurance agent should be able to send you another copy and answer any of your questions about your deductible without a problem.
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Information on a Deductible and the Rate You Pay for Car Insurance
If you choose to pay a higher deductible, you could be lowering your car insurance premium by a significant amount.
When you shop around for quotes on car insurance policies, ask about the amount of the deductible and what your options are for raising it to lower the cost of your premium.
You need to think carefully about the amount of the deductible that will work for you because you do not want to be hit with a huge loss when you have to file a claim.
Some states have regulations on the way that your deductible must be identified and described in the policy agreement.
If you have any issues with the deductible that you are required to pay in making a claim, you can contact your state department of insurance.
Deductibles and Your Basic Auto Liability Policy
The way that a basic auto liability policy works is that you are covered for when you are in an auto accident that you cause.
This means that if the other driver is injured or has damage to his or her car, then he or she could file a claim against your insurance company to recover.
In this case, no amount would have to be paid out of pocket for you to have the claim covered.
On the other hand, if your car is damaged by a car falling on it, if you have a deductible from your comprehensive policy, you will have to pay this amount to have the car repaired.
If there happens to be no deductible, which means you would pay a much higher amount for the policy, then you can get a settlement without having to pay out of pocket.
Recap on Zero Deductible Car Insurance
You might think that having no deductible for your car insurance sounds like a great idea because you would not have to pay anything out of your own pocket to have your car repaired after filing a claim.
However, there are other considerations to think about, such as this making your policy premium significantly more expensive.
Also, a zero deductible policy is probably only available for certain types of coverages, such as your collision and comprehensive insurance.
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Case Studies: Zero-Deductible Car Insurance
Case Study 1: Sarah’s Collision Coverage Claim
Sarah opted for zero-deductible car insurance for her collision coverage. One day, she accidentally backed her car into a pole, causing significant damage.
Since she had zero deductible, she didn’t have to pay any out-of-pocket expenses for the repairs. The insurance company covered the full cost, saving Sarah from a financial burden.
Case Study 2: Mark’s Comprehensive Coverage Claim
Mark had zero-deductible car insurance for his comprehensive coverage. During a severe hailstorm, his car suffered extensive hail damage.
Mark filed a claim, and because he had zero deductible, he didn’t have to contribute any money toward the repairs. The insurance company paid for the repairs in full, easing Mark’s financial burden.
Case Study 3: Lisa’s Liability Coverage Claim
Lisa’s car insurance policy had a standard deductible for liability coverage, which doesn’t typically offer zero-deductible options. One day, she caused an accident, and the other driver sustained injuries.
Lisa’s liability coverage kicked in to cover the medical expenses of the injured driver, and she didn’t have to pay any deductible. The insurance company took care of the costs entirely, helping Lisa fulfill her financial responsibility.
Frequently Asked Questions
What is zero-deductible car insurance?
Zero-deductible car insurance allows drivers to eliminate the deductible for collision and comprehensive coverage by paying higher monthly rates. This means that if you file a claim for physical damage to your car, you won’t have to pay any out-of-pocket expenses before the insurance company covers the costs.
Does zero-deductible car insurance apply to all types of coverage?
No, zero-deductible car insurance is typically only applicable to collision and comprehensive coverage. It does not eliminate deductibles for other types of coverage, such as liability coverage for personal injuries.
Why do car insurance policies have deductibles?
Car insurance deductibles serve as a way for insurance companies to discourage frequent or frivolous claims. By requiring policyholders to pay a certain amount out of pocket before the insurance company covers the rest, it encourages responsible filing of claims.
How does a car insurance deductible work?
When you file a claim under your collision or comprehensive coverage, the amount of your deductible is deducted from the settlement check. For example, if you have a deductible of $100 and file a claim for $1,000, you would receive a settlement check of $900. The specific deductible amount is outlined in your insurance policy agreement.
Can I choose the amount of my car insurance deductible?
Yes, you have the option to choose the amount of your car insurance deductible. Opting for a higher deductible can lower your car insurance premium, but it’s important to consider the potential financial impact if you have to file a claim and pay a larger deductible.
Are there any regulations regarding car insurance deductibles?
Some states have regulations regarding how deductibles must be identified and described in the policy agreement. If you have any issues with your deductible, you can contact your state department of insurance for assistance.
Should I choose zero-deductible car insurance?
Choosing zero-deductible car insurance can eliminate out-of-pocket expenses for physical damage claims, but it may also result in higher premium costs. Consider your budget and the potential savings versus the increased premium before deciding if it’s the right option for you.
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Brad Larson
Licensed Insurance Agent
Brad Larson has been in the insurance industry for over 16 years. He specializes in helping clients navigate the claims process, with a particular emphasis on coverage analysis. He received his bachelor’s degree from the University of Utah in Political Science. He also holds an Associate in Claims (AIC) and Associate in General Insurance (AINS) designations, as well as a Utah Property and Casual...
Licensed Insurance Agent
Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.