What Happens if You Can’t Pay Your Car Insurance Deductible?

What Is a Deductible in Car Insurance?

A deductible in car insurance is the amount you must pay out of pocket when you file a claim. Deductible amounts range widely, from a few hundred dollars to a few thousand dollars. After you pay your deductible, then your car insurance company kicks in to pay the balance on a covered claim.

Example: Let's say your deductible is $500, and an accident causes $2,000 worth of damages. After filing a claim, you have to pay the first $500 toward the cost of repairs. Then, your insurance company will send a check for the remaining amount to you or the repair shop to cover the rest of the cost.

Typically, you only need to pay a deductible when an insurance claim falls under a coverage type that has a deductible. Deductibles are common for collision or comprehensive coverage, which pays for repairs when your vehicle is damaged after an accident. However, deductibles don't apply to liability insurance, which helps protect you financially if you're responsible for causing damages to the other driver's vehicle or injuries.

What to Do if You Can't Afford Your Insurance Deductible

Most insurers require you to pay your deductible before paying out on a claim. So if you can't come up with the money right away, it could delay repairs after an accident. However, you may still have options when you can't afford your insurance deductible.

Here are a few strategies to consider:

• Wait to file your claim. If you don't have the cash on hand right away to pay your deductible, you can hold off on filing the claim. This might be a good solution if you're in between paychecks or just need a few weeks to save up some extra funds.
• Tap your emergency savings. After an accident you likely still need your vehicle to get to work, school or manage other responsibilities. Using the savings in your emergency fund can help you pay your deductible right away and minimize disruptions to your routine.
• Cash out rental coverage. If you have rental car coverage, ask your insurance company about a cash-out option. If you can go without a vehicle while repairs are made, you might be able to get a payment instead of a rental car and put the money toward your deductible.
• Borrow money. Consider asking friends or family to help you cover the deductible amount if you can't afford to pay in full. This way you can get your vehicle fixed faster with the help of insurance. Then, you can work out a payment plan to return the money you borrow over time.

Can You Make Payments on Your Deductible?

Your insurance company likely won't let you make payments on your deductible. But if you can't afford to cover the deductible in one lump sum, you may be able to work out a payment plan with the repair shop.

Splitting up the deductible into installments can help spread out the cost, while still keeping the repair process moving. Not all mechanics offer this option, but could be worth asking if you have a large deductible.

Some mechanics may also be willing to discount the cost of repairs, so try negotiating with the repair shop. For example, if your insurance company plans to send $1,000 for repairs and you owe $500, but can only afford $300—try asking the mechanic to knock $200 off the total cost.

Should You Take Out a Loan to Pay Your Deductible?

If you need your car urgently and don't have any other options to get the money needed to cover your deductible, a loan could help you out.

A personal loan could help you get the cash you need quickly. For instance, with some online lenders it only takes a few minutes to apply for a loan and funding may come as fast as the next day if you're approved.

Just keep in mind that taking out a loan means you'll have to pay interest, and sometimes other fees, so it might end up costing you more in the long run than your deductible. Be sure to shop around and compare interest rates and terms closely to find the best offer.

Tip: Most lenders offer preapproval without a hard credit check, making it easy to see loan options. Or, you can use Experian's loan comparison tool to compare multiple loans at once.

Is It Better to Have a High or Low Deductible?

The deductible amount you choose directly influences the cost of your policy—and how much money you need to come up with when filing a claim. Choosing a higher deductible typically means a lower monthly premium, while lower deductibles usually lead to a higher rate.

Although a lower deductible can jack up your monthly premium, it might be worth the added cost if it means being able to repair your car quickly after filing an insurance claim. Planning ahead is key, and the right insurance policy can help you find a "sweet spot" deductible you can afford.

How to Save on Car Insurance

The cost of car insurance is often a big monthly expense, but there are ways to save. Consider these tips that may help you lower your premium:

• Adjust your deductible. If your monthly premium is too high, ask your insurance company about raising your deductible to get a lower rate. Some insurers also offer a vanishing deductible, which reduces the amount you pay out of pocket for every policy term you go claims-free.
• Shop around regularly. At least once a year, shop around to compare insurance companies and policy rates. You can switch insurance companies at any time, so you could start saving right away. Experian's car insurance quote marketplace can help you compare multiple policy options at once.
• Practice safe driving habits. Car insurance companies look at your driving history when setting rates—including traffic violations or accidents.
• Bundle your policies. Many insurance companies offer savings when you combine more than one type of policy, like car insurance and homeowners insurance.
• Ask about discounts. Most car insurance companies offer a wide range of discounts, for safe drivers, completing safe driving courses, good students, vehicle safety features and more. Check with your insurance company or agent about any discounts that may be available.
• Keep tabs on your credit. Most states consider your credit-based insurance score when setting rates. These scores differ from the credit scores lenders use but are based on many of the same factors. Insurance companies use these scores to help determine the likelihood of potential future claims. Having good credit could help you get a cheaper rate.

The Bottom Line

Car insurance can offer financial protection against costly vehicle repairs if your car is damaged in an accident. But you usually have to pay your deductible before insurance kicks in. Choosing a deductible you can easily afford or stashing cash in a rainy day fund to foot the bill are two great strategies to make sure you can get your vehicle fixed right away if you need to file a claim.

And if you're not happy with your current deductible amount or monthly premium rate, don't be afraid to shop around. But before you do, make sure to know where your credit score stands. With Experian's free credit monitoring, you can easily check in on your score and take steps to improve it before applying for coverage.