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Auto Insurance Deductible Reimbursement

Deductible reimbursement is handled differently based on the insurance carrier. Some request the deductible first then will reimburse you once recovery is obtained. While others will completely waive the deductible payment based upon the information obtained and if you purchased “Collision Deductible Waiver” on your policy. Collision Deductible Waiver is an optional add-on coverage on top of collision coverage. CDW coverage is very inexpensive compared to collision coverage. Collision premium costs differ greatly based upon your vehicle value. However, this is not the case for CDW. CDW premium cost is based on your deductible amount. The most common collision deductible amounts are $500 and $1,000. Typically, CDW coverage cost less than $5 a month per vehicle.

CDW only applies when the insurance carrier can recover what is spent. Meaning, CDW will not apply when any one of these common situations take place: 

  • At-Fault Accident: Your deductible will apply 100% of the time if you are at-fault for any accident. This includes just your vehicle damages. For example, if you slowly back up into a cement wall. 
  • Split Liability Accident: Example, you back out of a parking space at the same time as another vehicle. Most insurance carriers will consider this a 50/50 loss. In at-fault states, this type of loss doesn’t increase your rates but your deductible will apply because they can only recover 50% of the costs.
  • Parking Lot Accident: Parking lot accidents are typically disputed and are hard to confidently sit liability as parking lots are considered private property. Unless an injury occurs, most police agencies will not complete a police report when an accident occurs on private property. Oftentimes, people admit fault at the scene but change their story once they report the accident to their insurance carrier. Tip: It’s always a good idea to take photos of an accident especially a parking lot accident because parking lots differ so much. Capturing the other party on video or having the other party sign a simple letter admitting fault can be the difference maker on how their insurance carrier handles the claim. 
  • Hit and Run Accident: Example, you are stopped at a red light when you are rear-ended. The other vehicle implies they will pull over onto the shoulder behind you but instead they speed up and flee the scene. Tip: Try to obtain the other party’s license plate number as soon as possible. According to AAA, an average of 682,000 hit-and-run accidents take place every year from 2005-2015.
  •  Single Car Accident: Example, you are driving on black ice and lose control of your vehicle. Most insurance carriers consider black ice involved accidents no-fault but the collision deductible will apply because they cannot pursue recovery against anyone. 

What About Comprehensive Deductibles? 

Comprehensive insurance covers your vehicle if damage results from theft, vandalism, fire, accidents with animals, weather/acts of nature, or a falling object. There is no such thing as a comprehensive deductible waiver because the likelihood of your insurance carrier recovering money spent on a comprehensive is extremely low. Any type of damage resulting from theft or vandalism should be reported to the police. Even if the police are able to capture the individual, your insurance carrier will need to collect from the assailant directly. Easy way put, they will need to take the assailant to collections and/or court for recovery. This procedure is expensive and takes a long time to establish. And the best case scenario is the assailant sets up monthly payments to pay off the balance. Because it takes so much time and effort, most insurance carriers refer these cases to a 3rd party. The 3rd party will charge a fee or take a percentage of the recovery amount. Therefore, obtaining full recovery is nearly impossible on any type of comprehensive loss.