Deductible
Also known as: Insurance deductible · Collision deductible · Comprehensive deductible · Self-insured retention
The part of a covered loss the policyholder pays out of pocket before the insurance pays the rest — the higher it is, the lower the premium.
Legal basis
NAIC, A Consumer's Guide to Auto Insurance
In auto insurance, deductibles apply mainly to collision and comprehensive coverage: with a $1,000 deductible, a $4,000 repair costs the policyholder $1,000 and the insurer $3,000. Liability coverage, which pays others, usually has none. The NAIC's consumer guidance puts the trade-off plainly: higher deductibles mean lower premiums, as long as the policyholder can afford to pay it after a loss.
For fleets and larger commercial buyers the same idea scales into self-insured retentions: the company absorbs the small, frequent losses and insures the large ones. The better it knows its own risk, the more it can retain and the less it pays for coverage it does not need.
The deductible also shapes behavior. It discourages small claims, and it creates a reason to fold unrelated or earlier damage into a covered event. Checking the timeline of the damage against the vehicle's actual movements is how claims teams keep that from passing.
Frequently asked questions
Should I choose a higher deductible?
A higher deductible lowers your premium and tends to reduce small claims, but you pay more out of pocket when something happens. Choose the highest amount you could comfortably pay tomorrow.