I have been rear-ended twice in the past few years. Another driver hit my car from behind while it was legally stopped. Both accidents were not my fault and both times the damage to my car was less than $500. My insurance handled the entire process for me, from the repairs to the rental car to collecting my $100 deductible and paying it back to me. The only thing I had to worry about was paying my $100 deductible to the shop. Take a look at what I could have to deal with if my deductible were $500 or $1,000 instead of $100:
Repairs
The car owner has to pay out of pocket for repairs that cost less than their collision deductible. If I had a higher deductible, I could have been out $400 to $1,000 on repairs for each of my rear-end accidents. If I were not an adjuster, I would have had to trust the shop’s assurance that the repairs were done correctly and efficiently. My insurance would not have sent an adjuster out to check the repair estimates.
Rental Car
Even the simplest auto repairs usually take at least 3 days. This is because most auto body shops work on a specific task each day of the week. For example: Monday they break cars down, Tuesday and Wednesday they bang out dents, Thursday they paint, and Friday they reassemble. In bulk this is more efficient for the shops, but for the car owner who is paying for rental it can get expensive.
Rental car insurance does not kick in until the repairs cost more than the collision deductible. Insurance companies get rental cars for $25 per day, on average. The best deal most individuals get on a rental car is $40 per day. If my insurance didn’t transfer to the rental car I’d be out an additional $10 per day. Mine does, but I still would have been out 3 x $40 = $120 for the rental car.
Collections
When I use my car insurance for repairs, they collect my deductible plus what they paid from the other car’s owner or insurance. Every good car insurance company does this. If my deductible were $500 or $1,000, then I would have to do this collecting myself for all my fender benders, or be out $400 to $1,200 per accident.
I’ll Keep My $100 Deductible
Most drivers have a $500 deductible on their collision insurance. Some have $1,000 or higher collision deductibles because it lowers the premium they pay for their car insurance. I personally keep my deductible at $100, even though my car is ten years old. I hope now you see why.