# Do I have to have a certain insurance deductible for an auto loan? **URL:** \ **Category:** Factual Questions\ **Created:** [March 31, 2021, 10:12pm UTC](https://boards.straightdope.com/t/do-i-have-to-have-a-certain-insurance-deductible-for-an-auto-loan/939119 "2021-03-31T22:12:41Z")\ **Posts on this page:** 20\ **Page:** 2
**Author:** ![DrDeth](https://avatars.discourse-cdn.com/v4/letter/d/b487fb/32.png) [@DrDeth](https://boards.straightdope.com/u/DrDeth)\ **Post date:** [April 2, 2021, 5:26pm UTC](https://boards.straightdope.com/t/do-i-have-to-have-a-certain-insurance-deductible-for-an-auto-loan/939119/21 "2021-04-02T17:26:34Z")
I suggest 0 deductible for Comp. It isnt that much , and when you get a cracked windshield or someone breaks you side window to steal your meter change, the add’l annoyance of having to pay $100 is pretty high. ---
**Author:** ![iamthewalrus\_3](https://avatars.discourse-cdn.com/v4/letter/i/258eb7/32.png) [@iamthewalrus\_3](https://boards.straightdope.com/u/iamthewalrus_3)\ **Post date:** [April 2, 2021, 5:35pm UTC](https://boards.straightdope.com/t/do-i-have-to-have-a-certain-insurance-deductible-for-an-auto-loan/939119/22 "2021-04-02T17:35:26Z")
> [@DrDeth](#): > > When you havent paid a car off, you need to have enuf insurance to cover the loan. This is interesting, because I put nothing down and my insurance covers just the value of the vehicle, which due to not-new depreciation is likely several thousand less than what I paid. So it sounds like the lender is taking a risk of at least several thousand dollars on me if the car were to be totaled soon. Again: I’m not worried. I can pay the difference if that happens. ---
**Author:** ![DrDeth](https://avatars.discourse-cdn.com/v4/letter/d/b487fb/32.png) [@DrDeth](https://boards.straightdope.com/u/DrDeth)\ **Post date:** [April 2, 2021, 6:44pm UTC](https://boards.straightdope.com/t/do-i-have-to-have-a-certain-insurance-deductible-for-an-auto-loan/939119/23 "2021-04-02T18:44:19Z")
Well, it all depends. Mostly on who you get the financing from, etc. ---
**Author:** ![iamthewalrus\_3](https://avatars.discourse-cdn.com/v4/letter/i/258eb7/32.png) [@iamthewalrus\_3](https://boards.straightdope.com/u/iamthewalrus_3)\ **Post date:** [April 2, 2021, 6:49pm UTC](https://boards.straightdope.com/t/do-i-have-to-have-a-certain-insurance-deductible-for-an-auto-loan/939119/24 "2021-04-02T18:49:56Z")
Got it from the dealership, which is offering it through the maker (Honda). I assume they’re making up both the 0% and the risk of some default via their profit margin on the car itself. ---
**Author:** ![DrDeth](https://avatars.discourse-cdn.com/v4/letter/d/b487fb/32.png) [@DrDeth](https://boards.straightdope.com/u/DrDeth)\ **Post date:** [April 2, 2021, 6:52pm UTC](https://boards.straightdope.com/t/do-i-have-to-have-a-certain-insurance-deductible-for-an-auto-loan/939119/25 "2021-04-02T18:52:25Z")
You likely have good credit. I am not sure why and when they ask for this, but I know it happens. ---
**Author:** ![ParallelLines](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/parallellines/32/3575_2.png) [@ParallelLines](https://boards.straightdope.com/u/ParallelLines)\ **Post date:** [April 2, 2021, 7:27pm UTC](https://boards.straightdope.com/t/do-i-have-to-have-a-certain-insurance-deductible-for-an-auto-loan/939119/26 "2021-04-02T19:27:29Z")
I am going to assume you have a bond or other liability insurance separately? Because the self-insured options from most dealers do not include that coverage. And if the latter, don’t forget to update the primary vehicle covered, as depending on carrier you have roughly 72 hours to do so. ---
**Author:** ![Tired\_and\_Cranky](https://avatars.discourse-cdn.com/v4/letter/t/a87d85/32.png) [@Tired\_and\_Cranky](https://boards.straightdope.com/u/Tired_and_Cranky)\ **Post date:** [April 2, 2021, 9:02pm UTC](https://boards.straightdope.com/t/do-i-have-to-have-a-certain-insurance-deductible-for-an-auto-loan/939119/27 "2021-04-02T21:02:31Z")
So what you are saying is that some finance companies require a maximum $1000 deductible. I know that. What you haven’t said is why the age of the car is relevant. Hint: You can buy new cars without using a finance company and you can use a finance company for a used car. The age of the car has nothing to do with the deductible you should have. If you have a loan, the consequences of failing to comply with a loan term requiring a lower deductible are something you should consider. I have paid cash for my new cars and the age of the car has never factored into my decision about the deductible. There is no reason it should. If not for the OP’s loan, there is no reason he should consider it either. > [@iamthewalrus\_3](#): > > So it sounds like the lender is taking a risk of at least several thousand dollars on me if the car were to be totaled soon. They can still go after you for the debt. Doing so might be aggravating for them and result in a higher incidence of writeoffs when they can’t collect but that’s just part of their cost of doing business. ---
**Author:** ![iamthewalrus\_3](https://avatars.discourse-cdn.com/v4/letter/i/258eb7/32.png) [@iamthewalrus\_3](https://boards.straightdope.com/u/iamthewalrus_3)\ **Post date:** [April 2, 2021, 9:05pm UTC](https://boards.straightdope.com/t/do-i-have-to-have-a-certain-insurance-deductible-for-an-auto-loan/939119/28 "2021-04-02T21:05:56Z")
I think you might be misreading my post. I got financing from the dealership. I have insurance through a normal insurance company. Yes, I have liability insurance. _That’s_ a catastrophic risk I need to insure against. ---
**Author:** ![DrDeth](https://avatars.discourse-cdn.com/v4/letter/d/b487fb/32.png) [@DrDeth](https://boards.straightdope.com/u/DrDeth)\ **Post date:** [April 2, 2021, 9:52pm UTC](https://boards.straightdope.com/t/do-i-have-to-have-a-certain-insurance-deductible-for-an-auto-loan/939119/29 "2021-04-02T21:52:23Z")
> [@Tired\_and\_Cranky](#): > > So what you are saying is that some finance companies require a maximum $1000 deductible. I know that. What you haven’t said is why the age of the car is relevant. I said nothing whatsoever about the age of the car. You didnt read my post in reply to you: > [@DrDeth](#): > > Sure, but the OP bought a new car. > > “New” in this case, means “new” to you. ---
**Author:** ![UltraVires](https://avatars.discourse-cdn.com/v4/letter/u/ecccb3/32.png) [@UltraVires](https://boards.straightdope.com/u/UltraVires)\ **Post date:** [April 3, 2021, 12:28am UTC](https://boards.straightdope.com/t/do-i-have-to-have-a-certain-insurance-deductible-for-an-auto-loan/939119/30 "2021-04-03T00:28:18Z")
> [@DrDeth](#): > > I suggest 0 deductible for Comp. It isnt that much , and when you get a cracked windshield or someone breaks you side window to steal your meter change, the add’l annoyance of having to pay $100 is pretty high. Yeah, but with any insurance company I have ever had, that $100 will cost you your “claims free” discount, so it is still better to pay the $100. In my kingdom, no company will be able to punish you for actually using the service you claim to provide. ---
**Author:** ![DrDeth](https://avatars.discourse-cdn.com/v4/letter/d/b487fb/32.png) [@DrDeth](https://boards.straightdope.com/u/DrDeth)\ **Post date:** [April 3, 2021, 1:03am UTC](https://boards.straightdope.com/t/do-i-have-to-have-a-certain-insurance-deductible-for-an-auto-loan/939119/31 "2021-04-03T01:03:54Z")
Ah, with mine it’s only collisions, I think. ---
**Author:** ![bob\_2](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bob_2/32/3341_2.png) [@bob\_2](https://boards.straightdope.com/u/bob_2)\ **Post date:** [April 3, 2021, 9:26am UTC](https://boards.straightdope.com/t/do-i-have-to-have-a-certain-insurance-deductible-for-an-auto-loan/939119/32 "2021-04-03T09:26:18Z")
It seems that the differences across the Atlantic are greater than I thought. In the UK all vehicles have to carry enough insurance to cover any third party costs after a collision. Police cars have scanners that can read licence plates and check details against the computer record. If you get pulled by a cop for no insurance, and cannot prove that you are covered (the computer can lag by a day or two for example) they will impound your car and you will pay through the nose to get it back. This apart from a hefty fine and six points on your licence. ---
**Author:** ![doreen](https://avatars.discourse-cdn.com/v4/letter/d/858c86/32.png) [@doreen](https://boards.straightdope.com/u/doreen)\ **Post date:** [April 3, 2021, 11:21am UTC](https://boards.straightdope.com/t/do-i-have-to-have-a-certain-insurance-deductible-for-an-auto-loan/939119/33 "2021-04-03T11:21:38Z")
I’m not sure it’s that different. In the US “collision” covers damage to your own car , like if you back into a fence or if you are hit by a driver with no insurance. “Liability” covers damages to other people’s property, like the owner of the fence you hit or the other car ( and medical expenses ) if you are at fault. ---
**Author:** ![md-2000](https://avatars.discourse-cdn.com/v4/letter/m/9d8465/32.png) [@md-2000](https://boards.straightdope.com/u/md-2000)\ **Post date:** [April 3, 2021, 12:37pm UTC](https://boards.straightdope.com/t/do-i-have-to-have-a-certain-insurance-deductible-for-an-auto-loan/939119/34 "2021-04-03T12:37:36Z")
Should also point out that if you are getting the insurance (or financing) through the dealer, odds are the dealer or the manufacturer has a deal with a company that provides this business - an insurance company and a finance company. (Or, IIRC, was it GM who set up their own finance wing so as to not miss out on that lucrative market?) Everybody gets a cut, in this case the dealer instead of a local agent. Also, many policies offer “New Vehicle Replacement” to cover the risk of early depreciation. If your brand new vehicle is totaled within 2 years (usually) of purchase, they will buy a full replacement. As expected, this costs a bit of money. Depending on the driving public in your area, this may be a worthwhile addition to your insurance. I agree, there’s a law of diminishing returns in higher deductibles. Particularly, with modern vehicles we seem to be getting away from that historical “no damage at 5mph” rule. A whole new plastic bumper and paint job is going to eat up any deductible pretty quick. Toss in a fender and headlight assembly and you could spend quite a bit of a $5000 deductible. Also a warning, insurance doesn’t pay for violations of the law. I knew a fellow who still had 5 years of payments on his nice new written-off truck, after he got drunk and crashed into a tree - right outside the local police station. Fortunately it did not matter quite so much, he had no additional vehicle payments on a replacement, since he lost his license. ---
**Author:** ![bob\_2](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bob_2/32/3341_2.png) [@bob\_2](https://boards.straightdope.com/u/bob_2)\ **Post date:** [April 3, 2021, 2:35pm UTC](https://boards.straightdope.com/t/do-i-have-to-have-a-certain-insurance-deductible-for-an-auto-loan/939119/35 "2021-04-03T14:35:57Z")
> [@md-2000](#): > > Also a warning, insurance doesn’t pay for violations of the law. Over here, the insured is required to take reasonable precautions against loss or damage. There was a fairly recent case where someone left their keys in the ignition while they paid for fuel. When they came out the car was gone and the insurance Co refused to pay out. ---
**Author:** ![LSLGuy](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lslguy/32/5813_2.png) [@LSLGuy](https://boards.straightdope.com/u/LSLGuy)\ **Post date:** [April 3, 2021, 2:53pm UTC](https://boards.straightdope.com/t/do-i-have-to-have-a-certain-insurance-deductible-for-an-auto-loan/939119/36 "2021-04-03T14:53:58Z")
> [@bob\_2](#): > > In the UK all vehicles have to carry enough insurance to cover any third party costs after a collision. This is generally true in the US although enforcement can be spotty, despite the increasingly common license plate scanners. And of course different states have different specifics and attitudes towards enforcement. Where it mostly falls apart here is that the statutes generally don’t say “… carry enough insurance to cover any third party costs …”. But rather they specify you have to carry $X of insurance to cover 3rd party costs. Where $X is barely 10% of what it ought to be. The numbers haven’t kept up with inflation nor with cars becoming more expensive and more fragile. It’s essentially a political decision to demand only the amount of insurance that an honest but poor person could afford. As insurance premiums themselves have outpaced general inflation, which in turn has outpaced low-end (and lower middle class) wages this makes even the minimum inadequate insurance increasingly unaffordable to large swathes of the driving populace. As a result most top 50 percentile Americans also carry “uninsured / underinsured motorist coverage”. This is you buying insurance on your dime to protect you, your car, and your passengers from accidents where somebody else with inadequate insurance wrecks your car and/or hurts your people. ---
**Author:** ![iamthewalrus\_3](https://avatars.discourse-cdn.com/v4/letter/i/258eb7/32.png) [@iamthewalrus\_3](https://boards.straightdope.com/u/iamthewalrus_3)\ **Post date:** [April 3, 2021, 4:29pm UTC](https://boards.straightdope.com/t/do-i-have-to-have-a-certain-insurance-deductible-for-an-auto-loan/939119/37 "2021-04-03T16:29:09Z")
> [@DrDeth](#): > > I suggest 0 deductible for Comp. It isnt that much , and when you get a cracked windshield or someone breaks you side window to steal your meter change, the add’l annoyance of having to pay $100 is pretty high. In about 20 years, I’ve had to replace 1 window and fix maybe two windshield dings. Total cost was maybe $600, or $30 a year. How much extra are you paying to avoid that annoyance? ---
**Author:** ![bob\_2](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bob_2/32/3341_2.png) [@bob\_2](https://boards.straightdope.com/u/bob_2)\ **Post date:** [April 3, 2021, 4:46pm UTC](https://boards.straightdope.com/t/do-i-have-to-have-a-certain-insurance-deductible-for-an-auto-loan/939119/38 "2021-04-03T16:46:10Z")
> [@LSLGuy](#): > > As insurance premiums themselves have outpaced general inflation, which in turn has outpaced low-end (and lower middle class) wages this makes even the minimum inadequate insurance increasingly unaffordable to large swathes of the driving populace. Very much true over here too. Young people buying their first car, frequently find that the insurance premium is greater than the cost of the car. It follows that there is a great temptation to not insure at all. Hence the rather draconian sanctions on uninsured drivers. ---
**Author:** ![Melbourne](https://avatars.discourse-cdn.com/v4/letter/m/b5e925/32.png) [@Melbourne](https://boards.straightdope.com/u/Melbourne)\ **Post date:** [April 3, 2021, 9:42pm UTC](https://boards.straightdope.com/t/do-i-have-to-have-a-certain-insurance-deductible-for-an-auto-loan/939119/39 "2021-04-03T21:42:38Z")
> [@bob\_2](#): > > There was a fairly recent case where someone left their keys in the ignition while they paid for fuel. Over here, that would also be a violation of the law. Car must be secured when not under control of a licensed driver. ---
**Author:** ![iamthewalrus\_3](https://avatars.discourse-cdn.com/v4/letter/i/258eb7/32.png) [@iamthewalrus\_3](https://boards.straightdope.com/u/iamthewalrus_3)\ **Post date:** [April 3, 2021, 9:47pm UTC](https://boards.straightdope.com/t/do-i-have-to-have-a-certain-insurance-deductible-for-an-auto-loan/939119/40 "2021-04-03T21:47:48Z")
> [@bob\_2](#): > > In the UK all vehicles have to carry enough insurance to cover any third party costs after a collision. I expect that’s not true. I’m sure they have some liability limit that they cover up to. If you lose control of the car and it plows into a group of people at speed, “any third party cost” could easily number in the tens of millions. [Previous page](https://boards.straightdope.com/t/do-i-have-to-have-a-certain-insurance-deductible-for-an-auto-loan/939119.md?page=1) [Next page](https://boards.straightdope.com/t/do-i-have-to-have-a-certain-insurance-deductible-for-an-auto-loan/939119.md?page=3)