Ask NJM

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.
-$750
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.
-$1,000
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 content on this page is intended for informational purposes only. It is not an insurance policy, and does not, in any way, replace or modify the definitions and information contained in individual insurance policies. Terms and coverage availability may vary by state, and exclusions and deductibles may apply. Discounts also vary by state and may not be applied to all policy coverages. Coverage for an accident or loss is subject to the terms and conditions of the insurance policy applicable to a particular claim.