Why Do You Have to Pay a Deductible If Not at Fault?
Why do you pay a deductible after an accident you didn't cause? This guide clarifies common insurance questions and how your money is recovered.
Many drivers are surprised to learn they may still need to pay an insurance deductible after an accident, even if they were not at fault. This seems counterintuitive, as it requires an out-of-pocket payment for damage caused by another party. This article explains the function of deductibles and the steps involved in potentially reclaiming your payment.
Understanding Deductibles and Insurance Coverage
An insurance deductible is the amount a policyholder agrees to pay out of their own pocket before their insurance coverage begins to cover a claim. This amount is established between you and your insurer when the policy is purchased. Choosing a higher deductible results in a lower insurance premium, while a lower deductible means higher premiums.
Different types of auto insurance coverage have their own specific deductibles. Collision coverage, which pays for damage to your vehicle from an accident with another car or object, regardless of fault, includes a deductible. For example, if your car sustains $1,200 in damage and you have a $200 collision deductible, your insurer will pay $1,000, and you are responsible for the initial $200. Comprehensive coverage, which protects against non-collision incidents like theft, vandalism, fire, or natural disasters, also has a deductible. These deductibles apply per incident, meaning you pay the deductible each time.
The Role of Fault and Subrogation
Determining fault establishes which party’s insurance is responsible for damages in an accident claim. In many “at-fault” or “tort” states, the driver who caused the accident and their insurance company are financially liable for resulting injuries and property damage. Even if you are not at fault, your insurance company may require you to pay your deductible upfront to initiate vehicle repairs. This is because your insurer pays the claim on your behalf to get your vehicle repaired quickly, before recovering funds from the at-fault party’s insurer.
This process leads to “subrogation,” a principle in insurance. Subrogation is the legal right that allows your insurance company, after paying your claim, to pursue reimbursement from the at-fault party’s insurance company. Your insurer steps into your shoes to recover the money they paid out for your damages, including the deductible you paid. This helps protect you and your insurer from bearing the costs of an accident that was not your responsibility.
Reclaiming Your Deductible
After you pay your deductible and your insurance company covers the remaining repair costs, the process of reclaiming your deductible begins, dependent on the success of subrogation. Your insurer will demand reimbursement from the at-fault driver’s insurance company for the amount they paid out, including your deductible. This recovery effort is often handled directly between the two insurance companies.
The timeline for getting your deductible back can vary significantly, from several weeks to many months, or even over a year. This depends on the claim’s complexity and the cooperation of all parties involved. If the at-fault party’s insurer accepts liability, your deductible is returned to you. However, if fault is disputed, or if the at-fault driver is uninsured or underinsured, the subrogation process can be prolonged or recovery may not be guaranteed. In such cases, your insurer may still attempt to recover funds, but the outcome is less certain, and you might need to provide supporting evidence like police reports or witness statements.
Scenarios Where a Deductible Might Not Apply or Be Waived
In specific situations, you might not be required to pay a deductible, or it could be waived. One common scenario is when the at-fault party’s insurance company directly covers your vehicle’s damages. If liability is clear and accepted quickly by the other driver’s insurer, you can file a claim directly with them, potentially bypassing the need to involve your own policy and pay your deductible. However, relying on the other insurer can sometimes lead to delays.
Some states have specific regulations that may impact deductible requirements in not-at-fault accidents. Certain states may mandate that insurers waive deductibles under specific conditions, such as when the other driver is clearly and entirely at fault. Uninsured Motorist Property Damage (UMPD) coverage can sometimes cover damage to your vehicle caused by an uninsured driver with a different or no deductible. Some states require UMPD to be offered with a low or no deductible.
Certain optional policy features, such as a Collision Deductible Waiver (CDW), can also waive your collision deductible. This applies if you are hit by an uninsured driver and meet specific criteria, provided the waiver is available from your insurer and in your state.