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What Is Zero-Deductible Car Insurance?

Updated: June 2018

Having zero-deductible car insurance means you selected coverage options that don't require you to pay any amount up front toward a covered claim. For example, say you opted for collision coverage with no deductible. If you have a covered claim for $1,500 in repairs, your insurer would reimburse you the full $1,500. On the other hand, if you had collision coverage with a $500 deductible, your insurer would reimburse you for $1,000 (covered repairs minus your deductible).

Here are some things to keep in mind if you're looking to buy a zero-deductible policy.

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The Cost of a No-Deductible Policy

You'll likely pay a higher premium for zero-deductible coverages, according to the Insurance Information Institute (III). That's because deductibles are designed as a way for you to share the risk of an accident with an insurer, the III says, and buying a no-deductible policy puts the risk solely on the insurance company. A higher premium for a zero-deductible (or low-deductible) policy is the insurance company's way of accepting that higher risk.

Deductibles Are Set for Each Coverage in a Policy

A deductible is your share of a covered claim. Certain coverages on your car insurance policy each come with their own, separate deductible. So, you could have multiple deductibles on one policy.

When you buy coverage, you may be able to select your deductible for certain coverages, like comprehensive coverage, and zero-deductible coverage may be an option.

When it comes to liability coverage, most insurance companies don’t require a deductible at all, regardless of your coverage selections.

Some Deductibles Determined by State Laws

On the other hand, you may find that, in some states, a zero-deductible option is not allowed for certain coverages — such as personal injury protection or uninsured motorist property damage coverage. Insurance is a regulated industry, so state law may actually require a deductible on certain coverages.

Bottom line: You may be able to choose some zero-deductible coverages, automatically have no deductible for other coverages, or be legally required to pay a deductible on other coverages. Talk with your local agent — he or she can help you make the choices that fit your needs and budget.

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This content is for informational purposes only and may not be applicable to all situations.

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