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What Is Zero-Deductible Car Insurance?

Updated: December 2019

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).

Note that if a coverage on your car insurance policy has a deductible, this amount will apply each time you file a claim. This is different from a health insurance deductible, in which you typically meet only one deductible every calendar year.

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. That's because deductibles are designed as a way for you to share the risk of an accident with an insurer, the III says. 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 what you pay out of pocket toward car repairs before your insurance helps cover a claim. Certain coverages on your car insurance policy each come with their own, separate deductible. So, you could have multiple deductibles in one policy.

When you purchase collision coverage and comprehensive coverage, you're typically able to choose your deductibles (from set amounts). Keep in mind that if you opt to have no deductible on a coverage, it may increase the amount you pay for that coverage.

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

Zero-deductible coverage options will vary by state and policy offerings.

Some states have laws that require a deductible on certain coverages. In those states, a zero-deductible option is not allowed for certain coverages — such as personal injury protection (PIP) or uninsured motorist property damage coverage. These coverages are not available in every state.

On the other hand, some states have laws and coverage offerings that allow waiving a deductible for certain types of claims. Take comprehensive coverage, for example, which helps pay to repair or replace a broken windshield. In most states, insurers typically waive the comprehensive deductible on a glass claim if the glass is repaired rather than replaced. And, in some states, comprehensive coverage may include "full glass coverage." If you purchase the full glass option, the deductible will be waived whether glass damage is repaired or replaced.

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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