Is No-Deductible Car Insurance Worth It?

Could no-deductible car insurance help drivers save money -- or could they end up paying more?

Car insurance is a necessary expense, but it comes at a cost. An insurance policy with a higher deductible could cause some policyholders additional financial stress. For drivers who want to avoid spending a lot of money on a deductible when making a car insurance claim, a no-deductible car insurance policy is one coverage option to explore. Here's what you should know about this type of car insurance coverage.

What is no-deductible car insurance?

With a no-deductible policy, drivers aren't required to pay anything when making an eligible insurance claim. This type of coverage is also referred to as zero-deductible car insurance.

Most traditional car insurance policies have deductibles. When a policyholder is in an accident or their car is otherwise damaged, they're responsible for paying their deductible when making a claim. Insurers may outline different deductible amounts depending on the type of coverage -- for example, a driver's collision coverage deductibles and comprehensive coverage deductibles may not be the same.

While no-deductible policies exist, not all car insurance companies offer them. Finding this type of coverage can be tricky because many insurers don't want to deal with the financial risk. When a policyholder with this type of coverage has an accident, the insurer is responsible for the full cost.

Some insurers may offer no-deductible rates for certain types of coverage but not others. For example, an insurer may offer no-deductible comprehensive coverage but may not provide no-deductible collision coverage.

Pros and cons of a no-deductible policy

Drivers considering switching to this type of car insurance should consider the decision thoroughly. Below we highlight a pro and several cons of no-deductible car insurance.

Pro

Policyholders aren't responsible for paying a deductible: A no-deductible policy could be advantageous for drivers with minimal funds in their savings accounts. A $0 deductible can feel like a win for their wallets.

Cons

Premiums cost more: Drivers who want a $0 deductible must pay for the privilege. Since the insurer is taking on risk, the policyholder will usually need to pay more for their premium. A more expensive premium can increase monthly expenses, negatively impacting their budgets.

This type of policy isn't available in all states: Car insurance laws vary greatly. Some states have minimum coverage rules for certain types of coverage. Depending on a driver's location, they may not have the option to purchase a no-deductible policy.

This type of coverage may only be available for certain situations: No-deductible car insurance coverage may not be available for all accidents and incidents. For example, some states allow drivers to have separate glass coverage that doesn't require a deductible for auto glass claims. Finding a policy that promises no deductible for all situations may be difficult.

Is a no-deductible policy worth it?

Drivers interested in this type of coverage should first consider the total cost of their premiums and the age and condition of their cars. For some people, it may not be worth paying a higher policy premium for a $0 deductible.

Some drivers may want to explore other solutions to make their car insurance deductibles more manageable. Choosing a lower deductible policy instead of a no-deductible policy may be an option to explore. However, drivers should expect to pay a higher premium for a lower deductible.

Alternatively, some drivers may want to consider choosing a policy with a higher deductible to save money on premium costs. Those who do this should plan to commit to saving extra money while they maintain this level of coverage. This way, they have enough money in their emergency fund to cover a pricier deductible if they need to file a claim in the future.

Review car insurance coverage and compare insurance rates

All car insurance policyholders should consider reviewing their insurance policies to ensure it meets their current needs. It's also good practice for drivers to get car insurance quotes regularly to compare rates. Check out our reviews of the best cheap car insurance to learn more.