Deductibles and Limits
The two numbers that shape a claim
Most conversations about auto insurance come back to two numbers: the deductible and the limit. They sit on either side of a covered claim.
- The deductible is the amount subtracted from a covered claim payment. It applies at the bottom of the claim.
- The limit is the most a coverage may pay for a covered claim. It applies at the top.
Between those two figures is the portion the coverage may pay, subject to the policy's terms, conditions and exclusions.
How deductibles work in practice
A deductible is chosen per coverage, not for the whole policy. Collision and comprehensive typically each have one; liability generally does not, because liability pays others rather than you.
Common deductible amounts include $250, $500 and $1,000, though what is available varies by provider and by state. Choosing a deductible is a trade-off between what you would pay at the time of a claim and what the coverage costs — but how that trade-off is priced is determined by the insurance provider, and varies.
How limits work in practice
Every coverage on a policy has its own limit. Your state sets minimum required limits for the coverages it mandates; you may be able to select higher limits than the minimum.
Selecting the state minimum means the policy would not pay above that minimum for a covered claim. Costs beyond the limit generally remain the responsibility of the at-fault driver.
Other factors that affect a premium
Deductibles and limits are only two of the inputs. Premiums can depend on factors including location, vehicle, driving history, claims history, coverage selections, insurance history and other factors permitted by applicable law. Which factors an insurance provider may use, and how much weight each carries, is regulated at the state level and differs between providers.
This article is general education about how auto insurance coverage works. It is not insurance advice, it does not describe any specific policy or provider, and it does not state what any policy will cost or cover. Road Cover is not an insurance carrier.