Auto Insurance Deductibles in Massachusetts: When Do They Apply?

The deductible on your auto insurance is the amount you are responsible for before the insurance company pays out on a loss. Auto insurance deductibles are on a per claim basis.  This means the deductible would apply every time you file a claim.

Your auto insurance deductible will apply for the collision and comprehensive (physical damage) coverages on your auto insurance policy.  Liability losses, such as bodily injury or property damage, typically would not be subject to a deductible.  It is important to make sure you carry the adequate liability limits on your auto policy.

Collision Coverage and Comprehensive Coverage are optional on the Massachusetts auto policy.  However, if the vehicle is financed or leased you will be required to carry both coverages.  Often times the lienholder will not allow you to carry auto insurance deductibles higher than $1000.

Collision Coverage would respond to the damage caused to your vehicle when involved in an accident with another vehicle or stationary object.  The repair or replacement of the vehicle is covered by the Collision Coverage.  The damage to the other party’s vehicle, or someone else’s property, would be paid out under Property Damage.  This is Part 4 of the Massachusetts Auto Policy.

Comprehensive Coverage, also known as ‘Other Than Collision’ Coverage, would respond to the physical damage to your vehicle that is not caused by a collision.  Examples of these types of claims would be fire, theft, vandalism, falling objects (including hail) and incidents involving animals.

When does the Auto Insurance Deductible Apply?

Let’s look at an example.

If you carry a $1000 collision deductible and have an accident where you are at fault, you would be responsible for the first $1000 of the loss.  If the total cost to repair your vehicle is $1900, you would pay the first $1000. The insurance company would pay out $900.

You do not pay the deductible to the insurance company; the claim payout is simply reduced by the amount of the deductible.

In MA, the threshold for a surcharge on your insurance is $1000.  Looking for more information regarding Surcharge Thresholds?  Check out our Auto Insurance Surcharge Blog here.

If you are not at fault you would have the option to file a third party claim against the other drivers Property Damage Coverage.

So what auto insurance deductibles should I carry?

The biggest consideration when choosing a deductible is the amount of money you would be able to pay in the case of an accident.  The higher the deductible you carry, the lower the annual premium.

There is only a minimal savings by carrying a higher comprehensive deductible.  We would recommend that you carry a $300 or $500 comprehensive deductible.  Often times, these types of losses are out of your control, like a falling tree limb or hail.

We typically recommend, if you are comfortable doing so, that you carry a $1000 collision deductible on your auto insurance policy.  We would rather see you save money each year in auto insurance premium, with the possibility of having to pay a higher deductible in the off chance that you ever need to file a claim.

Each year that you do not file a claim, you earn safe driving credits (Merit Rating credits). You will want to weigh your options before filing smaller claims.

Depending on the carrier, you may also earn Disappearing Deductible credits to help lower your out of pocket expense at the time of loss.  Carriers like MAPFRE/Commerce Insurance, Plymouth Rock Assurance and Safeco Insurance, all offer Disappearing Deductible credits for each clean driving year with their company.

Need help deciding which auto insurance deductibles are right for you?  We can help.  Click here to get started.

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