Best Car Insurance with a $500 Deductible

Car insurance with a $500 deductible

The average six-month premium for car insurance with a $500 deductible is a little over $850, or about $143 per month. That comes out to $1,720 per year when we looked at rates from seven top insurance companies. $500 is considered a standard car insurance deductible, but there are other considerations to think about when deciding on the best car insurance deductible for your situation.

We'll explore what deductibles are, how they impact your premium and your insurance policy, and which insurance companies offer the cheapest car insurance with a deductible of $500. Let’s get started.

USAA is the cheapest insurance company when it comes to full coverage with a $500 deductible, with an annual premium of $1,365, or $114 monthly.  If you don't qualify for USAA insurance, which is only available to military and their families, then look into Nationwide or Geico as other reasonable options. 

This reflects only our standard driver profile, which might not match your situation. Use our data as a starting point and try to look at as many insurance companies as possible.

On average, you could save $186 per annual insurance policy period by choosing a high deductible amount, such as $1,000 instead of $500. But there’s another reason to consider a higher deductible that can end up saving you thousands. By increasing your deductible, you also discourage yourself from using it and filing what would be considered an at-fault claim.

How rates can change after an accident or violation

When you file a claim under your collision coverage (and sometimes for a UMPD insurance claim) after a car accident, your insurance company will raise your rates for what they see as an at-fault accident. An insurance company views collision claims to be at-fault accidents because they see you, the driver, as in control of the vehicle when the accident occurred. Thus, you’re responsible.

As you can see, filing an at-fault claim where the damages are greater than $2,000 will raise your premium by over $885 per year, when compared to the $1,720 per year average rate for a $500 deductible policy. Because of this, most insurance experts recommend only filing an insurance claim if you suffer a catastrophic loss where the value of the premium increase plus your deductible is less than the cost of repairs.

Although you can expect a hefty increase from filing a collision claim, your comprehensive deductible is a little different. Your insurance company will generally consider comprehensive claims to be not at-fault because they tend to happen outside the control of the driver. Thus, the monetary impact of a comprehensive claim is almost zero.

Despite the evidence that a $500 deductible may not be the way to go, it's still a pretty standard deductible. Plus, there are times when your deductible will be chosen for you. If you have a loan or lease on your vehicle, you might be required to maintain at least a $500 deductible. When you enter these types of agreements, you do not own the vehicle and thus are required to maintain its physical integrity. Your loan and lease company might fear if you have a deductible greater than $500, you will be unable to pay it. Thus, $500 is usually the maximum amount they will allow.