Understanding Car Insurance Deductibles in Canada

A misunderstood component of car insurance is the deductible that gets paid in the event of a claim. Most people are familiar with the word, but many are unaware of how it affects their insurance and what happens if they file a claim.

Deductibles exist so that you and the car insurance provider both share responsibility for any risks and any claims made.

A deductible is an out-of-pocket amount a policyholder must pay when filing a claim. The amount to pay depends on your policy, with most car insurance deductibles ranging from $500 to $1000.

For example, if you have an accidental damage claim for $5,000 and a $500 deductible, your insurance company will pay $4,500 to cover the losses, and the $500 will be your responsibility.

In addition, claims that are less than the deductible amount will be the policyholder’s responsibility. For example, if your deductible is $1,000 and the damage is $700, your insurance company will not cover the damage costs.

Deductibles typically apply to:

• Collision coverage: This coverage will cover damage to your car caused by a stationary object or another vehicle collision. Damage to the other party’s property is not covered.
• Comprehensive coverage: Except for a collision where the insured policyholder is at fault, this covers all accident causes. Comprehensive insurance will also, for example, cover hail damage.

If you file a claim for any of the following under your auto insurance policy, you will be responsible for paying your deductible:

• You were at fault in an accident
• An accident in which you were partially at fault
• Theft or vandalism

If you meet one of the below requirements, you are exempt from paying your deductible:

• An insured driver caused the accident: If an insured driver is at fault, the damages will get covered by their insurance company. As a result, you won’t have to pay the deductible.
• A claim is made against your liability coverage: Liability claims are not covered by a deductible. Up to your insurance coverage limit, your insurer will cover the losses incurred to the other party.
• You have a policy with no deductible: If you choose a $0 deductible for your comprehensive policy, you will not be responsible for any deductible payments in the event of an accident. You will, however, pay higher premiums.

You will pay a reduced premium if you have a higher deductible on your car insurance. This is due to higher deductibles lowering the amount an insurance provider must pay in the event of an accident.

You can also choose a deductible based on your financial ability to pay in the case of an accident. If you can afford costly repairs, choosing a higher deductible allows you to save money on premiums. However, choose a lower deductible if you know an accident will significantly impact your finances.

And don’t forget to compare car insurance with our tool to find the perfect car insurance according to your needs.