Should You Raise Your Car Insurance Deductible? Run the Break-Even Math

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Raise your car insurance deductible only if the annual premium savings pay back the extra out-of-pocket cost within a few claim-free years and you could pay the higher deductible tomorrow without borrowing. A higher deductible lowers collision and comprehensive premiums, not liability coverage. In 2025, 33% of U.S. auto policies carried a deductible of $1,000 or more.

What does a higher deductible actually change?

A higher deductible lowers your collision and comprehensive premium, but it raises the first money you pay when you file a claim. It does not change your liability limits, and it usually does not apply to uninsured motorist or medical payments coverage. The premium discount is real. The risk is also real.

In 2025, 33% of U.S. auto policies carried a deductible of $1,000 or more, up from 23% in 2022, according to the 2026 LexisNexis U.S. Auto Insurance Trends Report. The report attributes the shift to four years of sustained rate increases and policyholders adjusting coverage to manage premiums.

The break-even formula is simple: extra deductible divided by annual premium savings equals the number of claim-free years needed to break even. Suppose you move from a $500 deductible to a $1,000 deductible. You add $500 to your claim-day cost. If the move saves $200 a year, you need 2.5 claim-free years to recover the extra $500. If it saves $100 a year, break-even is five years. If it saves $50 a year, break-even is 10 years.

What changes by state or policy?

A deductible is not one number for the whole policy. It applies to collision coverage and comprehensive car insurance coverage, which pay for damage to your own vehicle. Liability coverage, which pays other people, generally does not have a deductible. Uninsured and underinsured motorist coverage and medical payments coverage usually do not have one either, though a few states allow a small UM/UIM deductible.

Typical deductible amounts are $250, $500 and $1,000, according to the National Association of Insurance Commissioners (NAIC). Some insurers also offer a $2,000 option. State rules can change the math at the edges. Florida law says the deductible does not apply to windshield damage under comprehensive coverage, according to Florida Statute 627.7288. That means a windshield claim in Florida may be covered without you paying the comprehensive deductible.

South Carolina currently requires a zero deductible for automobile safety glass, but House Bill 4817 would keep that rule only through December 31, 2026, and allow a zero-dollar or up-to-$100 deductible option beginning January 1, 2027. The bill passed the South Carolina House and is under Senate consideration.

For a hypothetical example, consider a driver with a $10,000 car and $2,000 in savings. That driver may find a $1,000 deductible manageable. A driver with the same car and no savings may not.

What drivers should do now

Before you change your deductible, run the numbers for your own policy and your own cash position. If you are also looking for other ways to reduce your premium, review our guide to lowering your auto insurance premium.

What this article does not cover

This article does not compare insurers, rank companies or recommend a specific deductible for your situation. It does not provide legal or financial advice. Deductible options, premiums and state rules vary, and the right choice depends on your policy, your savings and your risk tolerance. Talk to a licensed agent or your state insurance department before changing coverage.

Frequently Asked Questions About Car Insurance Deductibles

Does a higher deductible lower my whole premium?

No. A higher deductible lowers collision and comprehensive premiums. Liability coverage, uninsured and underinsured motorist coverage, and medical payments coverage usually do not have a deductible, though a few states allow a small UM/UIM deductible.

How do I calculate the break-even on a higher deductible?

Divide the extra deductible by the annual premium savings. For example, moving from a $500 to a $1,000 deductible adds $500 to your claim-day cost. If that move saves $200 a year, the break-even is 2.5 claim-free years.

Does a higher deductible affect windshield claims?

In Florida, the comprehensive deductible does not apply to windshield damage under Florida Statute 627.7288. South Carolina requires a zero deductible for automobile safety glass through December 31, 2026, and House Bill 4817 would allow a zero-dollar or up-to-$100 deductible option beginning January 1, 2027, if it becomes law.