What if you can’t pay your deductible?

Auto repair after a crash isn't cheap. What if you can't pay your deductible?

Auto repair after a crash isn’t cheap. What if you can’t pay your deductible? (image by bradfordauto.com)

Each year more Americans are choosing higher deductible amounts for their insurance coverage.  For a variety of reasons, higher deductible means lower rates and cheaper monthly premiums.  With most insurers offering deductible amounts of $1,000, $2,500, and even higher amounts, more and more consumers are choosing to risk paying a hefty sum out of pocket in the event of a claim.  When you have the cash in a savings account or room on a credit card, you might be able to stomach such an amount if it means getting your car back on the road; but what happens when you can’t afford to pay your deductible?

Following are a handful of strategies to help you make ends meet and get your car back on the road after a serious accident.

  • Don’t Fix Everything

    • This is the simplest and most effective  solution to getting your car back on the road without paying your deductible.  Your insurance company is required to issue payment for the full amount of the repair, but you still get to choose how that money is spent, and what does and does not get fixed.
    • In most collision repair jobs, there is a combination of necessary functional or mechanical repairs, and optional cosmetic repairs.
    • Ask the shop what can be ignored, what’s necessary, and what can be repaired to a “functional but not beautiful” standard.  This might mean driving around with a mismatched fender or bumper, but it’s better than no repair at all.
  • Maximize the Claim Payment

    • Work with your chosen body shop to have them do some basic disassembly to find and document all accident-related damage, and make sure your insurance adjuster inspects it after the body shop does so.  This will cause your insurer to issue additional payment for everything that is found, and often this can significantly increase the amount of the repair estimate, and the insurer’s payment.
    • You’re still free to choose what the shop does and does not fix, though you may have to pay the shop a small fee for their “diagnosis” time if they’re not fixing everything.
  • Go Without A Rental

    • Some insurers will offer “cash out” options for rental coverage, instead of paying directly for a rental car.  If you have rental coverage, and you can go without your car for a few days or weeks, ask your insurer to reimburse you for your rental.
  • Use Aftermarket or Refurbished Parts

    • Ask your repair shop about aftermarket, used, and refurbished parts.  This is a minor cost saving measure in the scheme of things, but a hundred or two hundred dollars here and there can make a difference.
  • Shop Around

    • If your car is still safe and legal to drive after the accident, take your time planning which shop to take your car to.  Get multiple estimates from different shops, and ask each one what they can do to keep your repairs within a budget.
    • If your car is NOT safe to drive or isn’t legal to be on the road due to damage and it’s being towed from the scene, demand the tow truck to bring your car to your residence instead of a repair shop.  If you don’t tell them what to do, most tow truck drivers will bring the vehicle to a shop of their choice, because they get a kickback or extra business from the shop.  
    • Most insurance companies will pay the extra $100 or $200 for an additional tow from your residence to your chosen shop at a later date.  Even if they refuse, an extra $100 or $200 for the additional towing might mean getting friendly service from a shop you can trust (and saving hundreds or thousands of dollars in repair costs), or difficult service from a shop that leaves you with few options and keeps your car until you pay every penny.
    • When the car is parked at your residence, take numerous photos of the damage and email them to various shops to get quotes.  They will likely need your car’s Vehicle Identification Number, which can be found on any official vehicle registration document and on the vehicle itself.
  • Seek Out Payment Plans

    • Some shops will offer payment plans for customers.  If you present yourself as reliable, professional, and straightforward, most shops will be willing to work with you in this way.
    • While it may hurt your credit score, opening up a new credit card may be one of your only options if all else fails.  You might also be able to get a limit increase on a current credit card if you call and speak with your creditor.  This should be a last-resort option after all other options are exhausted, but for some the ability to drive to work is a necessity to make ends meet.
    • “Title loans” are an option and most likely a last resort for this circumstance.  Be careful, as most title loan services will charge outrageous rates and some can be “loan sharks”, so be sure to read any contract you may have before signing up for a title loan, and use this only as an absolute last resort if all else fails.
  • Plan Ahead

    • Examine your budget ahead of time and ask yourself, “Can I really afford to pay my deductible out of pocket right now?”  If the answer is clearly no, you should lower your deductible in exchange for slightly higher monthly rates.
    • If you know you’re not going to be able to meet your deductible, don’t contract to have repairs done that include the deductible in addition to payouts from your insurer, because you may find yourself without transportation after the repairs are done. Most states allow shops to retain possession of a car using a mechanic’s lien on the unpaid bill. The shop can legally keep your car until they’re paid.

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