What Is a Deductible? How High Should I Set Mine?

Last Updated on January 30, 2026

In auto insurance, a deductible is the amount you agree to pay out of pocket on a covered claim before your insurer pays the rest (up to your policy limits). The New York State Department of Financial Services (DFS) explains deductibles this way for auto physical damage coverages.

This guide focuses on auto deductibles (especially collision and comprehensive). Rules and options can vary by insurer and state, so always confirm the details on your declarations page and policy form.

How an Auto Insurance Deductible Works

Deductibles typically apply per covered claim, not once per year. If you have a covered loss, you pay your deductible first, and the insurer pays the remaining covered amount (up to limits) after the deductible is applied.

Example: Your vehicle has $5,000 in covered collision damage and your collision deductible is $2,000. You pay $2,000, and your insurer pays the remaining $3,000 (assuming the damage is covered and repairs are approved).

Which Coverages Usually Have a Deductible?

Most drivers see deductibles most often on “physical damage” coverage—coverage that pays to repair or replace your vehicle. Some optional add-ons may also have deductibles or similar out-of-pocket features depending on the insurer.

Coverage Type	What It Helps Pay For	Deductible Notes
Collision	Damage to your car from a collision (vehicle, object, rollover)	Usually has a selectable deductible
Comprehensive	Non-collision losses (theft, weather, vandalism, animal strike, etc.)	Usually has a selectable deductible
Glass (if added)	Repair/replacement of window glass	May be offered with a reduced or $0 deductible depending on the policy
Liability	Injuries/damage you cause to others	Typically does not have a deductible

Collision vs. Comprehensive

Collision and comprehensive are the two main coverages where you’ll choose a deductible. Together, they’re commonly bundled into what people call “full coverage” (though “full coverage” isn’t a standardized term and doesn’t automatically include every coverage you might need).

Here’s the practical difference:

• Collision coverage typically applies when your car hits something (another car, a pole, a wall, etc.). Animal strikes are commonly handled under comprehensive instead—see animal damage coverage details.
• Comprehensive coverage generally applies to non-collision losses like theft, hail, falling objects, and more. It may cover vandalism and weather-related losses like flood damage, depending on the facts of the claim and your policy terms.

How to Choose the Right Deductible Amount

The “best” deductible is the one you could comfortably pay quickly if your car needed repairs tomorrow—without derailing your budget. Start by looking at your emergency savings, your vehicle’s value, and your risk tolerance.

Common Deductible Levels and Trade-Offs

Deductible Level	What It Usually Means	Best Fit For
Lower (e.g., $250–$500)	Less out-of-pocket on a claim, typically higher premium	Drivers who prefer predictability or have limited savings
Mid (often $500–$1,000)	Balance between premium and out-of-pocket costs	Many drivers who can handle a moderate surprise expense
Higher (often $1,000+)	More out-of-pocket on a claim, typically lower premium	Drivers with solid emergency savings who want to reduce premiums

If you’re considering raising your deductible, ask yourself whether you’d realistically pay out of pocket for smaller repairs anyway. If you would, a higher deductible may align better with how you actually use your coverage.

A Simple Break-Even Check

Instead of guessing, compare real quotes at different deductible levels and do a quick break-even estimate:

• Step 1: Get the premium for your current deductible and the premium for the higher deductible you’re considering.
• Step 2: Calculate your annual savings (difference in annual premium).
• Step 3: Divide the additional deductible you’d take on by your annual savings to estimate “break-even years.”

If the break-even time feels longer than you’re comfortable with (or you couldn’t easily afford the higher deductible during a tight month), keep the deductible lower.

Why a Higher Deductible Can Lower Your Premium

When you raise your deductible, you’re taking on a larger share of potential repair costs. That can reduce the insurer’s expected claim payments, which often lowers the premium. A higher deductible can also reduce the chance you’ll file smaller claims—something that can matter for future pricing and underwriting decisions.

Other Ways to Reduce Full-Coverage Premiums

If you’re trying to lower premiums while still protecting your vehicle, these are three common levers to consider:

• Re-evaluate physical damage coverage on older cars: If your vehicle’s market value is low, paying for collision/comprehensive may not be cost-effective after accounting for the deductible.
• Shop rates carefully: Pricing can vary widely—compare quotes from different providers using the same coverages and deductibles.
• Adjust deductibles strategically: If you can afford a higher out-of-pocket amount, raising deductibles may help reduce premiums (especially if you tend not to file small claims).

For a quick overview of required coverages and related New York rules, see New York laws and requirements. (Coverage requirements and deductibles are separate topics, but they often come up together when you’re reviewing your policy.)

Can You Have a $0 Deductible in New York?

For private passenger automobiles registered in New York, DFS has stated that insurers generally may not offer deductibles below certain minimums for physical damage coverage. In a DFS opinion, the minimum deductible is described as $50 for fire/theft/comprehensive and $100 for collision (with specific assigned-risk nuances), and only window glass coverage may be sold without a deductible.

If you’re mainly worried about windshield claims, look into full glass coverage or similar options your insurer offers.

DFS has also indicated there’s no special exception to these deductible minimums for antique, special, or historical vehicle programs. If you’re insuring a collector vehicle, see classic and collector car insurance considerations for coverage features that may matter beyond the deductible alone.

What Happens When You File a Claim?

When you file a collision or comprehensive claim, the deductible is usually applied to the covered repair amount. The shop may collect the deductible directly from you, or you may pay it through the insurer’s claim process—details vary by carrier.

• Document the loss: Photos, dates, location, and any police report if applicable.
• Start the claim: Follow your insurer’s process—here’s a step-by-step overview on filing a claim after an accident.
• Confirm coverage and deductible: Verify whether the loss is collision or comprehensive and which deductible applies.
• Ask about recovery: If another party is clearly at fault, your insurer may pursue reimbursement (subrogation). In some cases, you may be reimbursed for your deductible after recovery—timelines and outcomes vary.

It’s also helpful to know that liability coverage generally does not use a deductible the way collision and comprehensive do. Liability coverages—like bodily injury and property damage—are designed to protect you when you’re legally responsible for injuries or damage to others, subject to limits and policy terms.

Bottom Line

Choose a deductible you can afford in a worst-case month, then compare real quotes to see how much premium difference you get for taking on more out-of-pocket risk. If your current insurer’s pricing doesn’t make sense for your needs, consider switching auto insurance after you’ve matched coverages and deductibles apples-to-apples.

FAQs on Auto Insurance Deductibles