What Is a Deductible?

A deductible is the amount you pay out of pocket for an insurance claim. You choose your deductible when you buy the policy.

Here’s how it works:

Your car is damaged in an accident.

Cost for repairs: +$3,000
Your deductible:
This is what you pay.
Your insurer will issue a claims check for: =$2,250

Deductibles also apply to homeowners insurance. For example, let’s say a storm causes damage to your roof.

Your home is damaged due to a storm.

Cost for repairs: +$12,000
Your deductible:
This is what you pay.
Your insurer will pay: =$11,000

Using the example above, if the cost to fix your roof is $900, you would pay the entire bill.

Higher deductible = lower premium

Choosing a higher deductible lowers the cost of your premium, since you’re agreeing to pay a greater portion out of pocket. On the other hand, a lower deductible raises the cost of your premium.

If you opt for a higher deductible, make sure it’s an amount you can afford to pay.

Do I pay my deductible if I’m not at fault?

If your car is damaged in an accident and you’re not at fault, you still have to pay your deductible, but NJM will work with you through a process called “subrogation” to try and recover your deductible from the other driver’s insurance company.

The information and descriptions on this site are general in nature. The coverage afforded for a particular loss depends on the specific facts and the terms, exclusions, and limits of the actual policy. Nothing on this site alters the terms or conditions of any policy, as the policy controls coverage. Coverage options, limits, discounts, deductibles, and other features are subject to underwriting criteria, state availability, and effective dates. Coverage provided and underwritten by NJM Insurance Company and its subsidiaries, 301 Sullivan Way, W. Trenton, NJ 08628.