- Liability insurance covers the cost of damage related to the other vehicle
- Drivers only pay a deductible for collision and/or comprehensive insurance
- Common deductible amounts are $500 or $1,000
The burden of covering the cost of property damage, medical bills, and more falls on the at-fault driver when an accident occurs. While liability insurance covers damage to the other driver’s vehicle, what about your car? If your vehicle is damaged, you're required to pay your insurance deductible before your insurance covers the cost of repairs. We'll explain different coverages, how deductibles work, how to choose the right deductible, and how hitting a car can impact your car insurance premium.
Am I required to pay a deductible if I hit another vehicle?
Liability coverage does not require a deductible. However, it only covers the cost of repairs for the vehicle you hit. Collision and comprehensive insurance are additional coverages that you can purchase to protect your vehicle. They require a deductible to be met before your insurance covers the cost of repairs to your car.
For example, let's say you're at fault for an accident that causes $4,000 worth of damage to your vehicle. If your deductible is $500, you will pay that, and your insurance company will cover the remaining $3,500. However, keep in mind that if the cost of repairs is more than the vehicle's value, your insurance company will pay you what your vehicle is worth instead of paying for repairs.
Depending on your deductible and repair costs, it might be more cost-effective to pay the cost of repairs out of pocket. For example, if the repair costs $350 and your deductible costs $500, it would save you money to pay the $350.
Do I pay a deductible if I am hit?
When another driver hits you, you file a claim with their insurance company. However, this process can be lengthy and could leave you without a vehicle for weeks. Filing a claim with your insurance company and paying a deductible can get you back into the driver's seat of your vehicle faster. Once the claim has been investigated, you can get reimbursed for the deductible you paid your insurance company if the other driver is found at-fault.
How do I choose the right deductible?
You want to choose your deductible based on what you can afford. Typically, collision and comprehensive insurance deductibles are $500 or $1,000. The deductible you choose impacts your premium. A higher deductible equals a lower monthly premium, and a lower deductible equals a higher monthly premium.
The average cost of collision insurance is close to $290 per year, while the average cost of comprehensive insurance is a little more than $134 per year. Therefore, drivers could pay close to $500 per year for these additional coverages.
You want to consider what you can afford monthly, but you also want to consider what you can afford if you are involved in an accident since insurance won't cover the cost of repairs until the deductible has been paid. Do car insurance premiums increase after an accident? Insurance premiums are calculated using several factors, including:
- Vehicle usage
- Type of vehicle
- Type of coverage
Any accident that is your fault becomes part of your driving record. And since your driving record is used to calculate your premium, you will likely see a rate increase when you renew your policy. In addition, the accident can impact your premium for up to three years in many cases.
Drivers can always shop around and compare car insurance rates for a price that fits their budget.
What should I do if there is no damage to the car I hit?
You should always report a car accident, even if there is no damage to the vehicles involved. Drivers may be concerned that their insurance premiums will increase if they do so, but the consequences of not reporting an accident can still cost them big.
Reporting the accident can help your insurance company investigate and determine fault. And if you hit a car and don't report it right away, your insurance company may not cover any expenses related to the claim.
The Bottom Line: Consider Collision and Comprehensive Coverage
While you don’t have to pay a deductible with liability coverage, it is not enough protection if your vehicle is damaged in an at-fault car accident. Investing in collision and comprehensive coverage is beneficial because the added protection saves you money if your vehicle is damaged from hitting another car. However, ensure that you can afford the monthly premium and deductible.