To Pay a Deductible or Not?

Your deductible!!! Almost always the first consideration everyone has when they are filing their claim. Or more commonly, “if it isn’t my fault then I don’t pay my deductible,” a misconception. You have to know what your deductible is and when you will and won’t pay it when you file your claim so you don’t end up surprised and left with an unexpected expense.

What is a deductible?

A deductible is the amount you choose to pay whenever you file a claim. It is the amount you are choosing to self-insure.  You choose the deductible when you initiate your auto insurance policy and the amount can vary widely. Some people choose deductibles as low as $0 or $50, while others can have deductibles that climb into the thousands. Naturally, the amount you choose can also have an impact on your premium. When your deductible is lower, your premium tends to be higher and when it is higher, your premium tends to be lower.

Whether high or low, the deductible will be deducted from any repairs or expenses on your claim, prior to any money being paid out by your insurance company. This applies to repair estimates as well as other expenses such as car seat reimbursement or personal property payments that may be included in your auto claim.  

When is your deductible due?

Technically, your deductible is always due. Whenever you file a claim, you should be ready to pay it especially if you want to start the repair process quickly. Normally, the deductible will be paid to whichever shop you are using to get the repairs done and it will normally be due when you pick up the vehicle after the repairs are complete.

If you cannot pay your deductible immediately, you can always put the claim on hold before proceeding with any repairs. In most states, you have at least a two-year statute of limitations on claiming property damage to your vehicle after an accident (your insurance company may have a different policy on limits for repairs under your claim, but you can always ask your adjuster if you need more details).

How do I get my deductible back?

There are several circumstances where you can either have your deductible waived or get your deductible reimbursed. The first requirement will always be that you cannot be at fault for the accident. In order to get your full deductible back you cannot be even partially at fault for the accident, the other party has to be found fully responsible. Once you cross that hurdle, there will be other requirements to meet as set by your insurance company.

There are some insurance companies that will waive your deductible.  That means that once you meet certain requirements, you will not have to pay your deductible to the shop and it will be covered by your insurance company. Each company has different policies and requirements so you will need to speak with your adjuster to determine if your company does this and if you qualify. For those companies that waive deductibles the other party’s insurance company normally has to have accepted liability for the accident for them to proceed with a waiver, but each company does have it’s own policies so make sure you ask!

There are other companies that will reimburse your deductible once the claim is complete.  This means if your company enters a subrogation or arbitration process in an attempt to recuperate claim expenses from the insurance company of the at-fault party, once that process is complete, your deductible will be part of the claim expenses that are reimbursed and then paid out to you.

Keep in mind where the insurance companies don’t agree on liability and arbitration doesn’t resolve the disagreement (for example in claims where neither party is found at fault, also know as word versus word) you will most likely not get your deductible back since no expenses were recovered.

What about uninsured motorists?

What if you are involved in hit and run or are hit by someone who is uninsured?  Well, to be honest it depends. Each state and company have different requirements for their uninsured motorist coverages.  First and foremost, you need to make sure you have this coverage on your policy.  In many states it is option and many don’t add uninsured motorist property damage to their policy.

Once you’ve confirmed that you do have uninsured motorist coverage, you need to confirm what kind of uninsured motorist property damage coverage you have. Some types will cover just the deductible and will have certain requirements (one of the most notorious is California, which has very strict requirements for how uninsured motorist property damage coverage is applied), other types of coverage will only cover the deductible in part but may cover a rental vehicle or other claim expenses.

Conclusion

While your deductible may in some instances be waived or reimbursed, there may be many more cases where this is not possible. Try to be ready in those circumstances because accidents tend to happen at the worst possible time. A good way to be ready to pay your deductible is to always have a separate account where your deductible is stashed away for use only when the unthinkable happens. There may be some sacrifice to make it happen but you will be grateful the day you have to pay a deductible and don’t need to pull the money from your checking account or sit the expense on a credit card.