If you’ve ever been brave enough to actually read through your insurance policy documents (we know, they can be a little … dry), you’ve likely seen the term “deductible” sprinkled throughout your coverage explanations. Whether you have car, homeowners, or health insurance (or all of the above), you may be wondering what exactly a deductible is, let alone how it affects you and your coverage. Thankfully, it doesn’t have to be too confusing. Here’s how it all breaks down.

What is an insurance deductible?

Put simply, your insurance deductible is the out-of-pocket amount you choose to pay for certain coverages if you need to file a claim (like a $500 deductible on comprehensive and collision coverages, say). Your insurer usually gives you a range of deductibles to choose from and you can pick the amount that works best for your budget.

The more you choose to potentially pay out of your own wallet — like a $1,000 deductible compared to a $500 one — affects your insurance premiums, regardless of policy type (auto, homeowners, etc.). The more you’re willing to pay in the event of a claim, the less you’re going to pay for your insurance premium, and vice versa. This is because you’re willing to take on more (or less) of a financial risk if a claim arises.

Why does your deductible amount matter?

If you ever need to file an at-fault insurance claim, you need to have your deductible amount at the ready before your insurer steps in to help pay for the rest of the damage (up to your policy limits). If you’ve chosen a $1,000 deductible but you don’t have $1,000 in the bank, your insurance claim could be significantly delayed until you’re able to pay it.

Are there exceptions to paying my deductible?

Many insurers (including Esurance) offer a $0 glass damage deductible on car insurance in certain states so you don’t have to pay anything should your ride’s glass get damaged or shattered. That’s because it’s generally not worth making an insurance claim to replace a windshield since the cost of replacement rarely meets or exceeds your deductible amount.

There are other special exceptions to insurance deductibles that should be considered, like the fact that you may not be required to pay if you, as a homeowner, are dealing with personal liability or medical payment claims. It’s always a good idea to speak with your insurance company to see what situations you’re responsible for when paying a deductible (and when you’re not), just in case.

How do you know which amount is right for you?

This one’s pretty simple: how much can you afford right now if you need to file a claim? You never want to be left in the lurch by not having enough cash in the bank to cover emergency expenses like an insurance claim deductible. It’s best to be conservative in your estimate. If you’re living paycheck to paycheck, you may want to choose a lower deductible in case catastrophe strikes and you need things fixed up ASAP.

Can you change your deductible if you want to?

With most car and homeowners insurance companies, you can change your coverage deductibles whenever you need to. However, there are always exceptions — for example, if you live in a coastal area and are at high risk for hurricanes, you may be required to pay a specific percentage deductible rather than the typical dollar deductible.

The percentage deductible may not be changeable since it’s based on a percentage of your policy coverage’s limits. Wind and hail deductibles often function in a similar way to hurricane deductibles, so once again, it’s important to contact your homeowners insurance company to determine how these specific coverage deductibles work for your policy.

With health insurance, on the other hand, you can usually only change your deductible during a specified open enrollment period each year. There are certain cases (or “life events”), however, when you’re typically able to change your deductible:

  • You lost your other health insurance due to job loss, divorce, or losing your dependent status
  • You get married
  • You give birth to or adopt a child
  • You gain citizenship to the U.S.

If you’re an Esurance policyholder and have questions about your policy’s deductibles, you can log into your policy or call us at 1-800-ESURANCE (1-800-378-7262). And if you aren’t part of the Esurance family (yet), you can get a quick, free quote online to see all the perks we offer.

Not available in all states. Esurance Insurance Company and its affiliates: San Francisco, CA. This page provides a summary of coverages and is not meant to describe actual coverage under any individual auto insurance policy. Coverages, discounts, and billing options are subject to state availability, individual qualification, and/or the insuring company’s underwriting guidelines. Terms, conditions, limits, and exclusions apply.

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about Megan

After beginning her Esurance career in 2012 as a sales agent in Phoenix, Megan made her way out to San Francisco to join the company’s editorial team and pursue her love of writing. She spends most of her free time baking fancy cookies and forcing her cats to snuggle with her.