What is an auto insurance deductible?

An auto insurance deductible is the amount you agree to pay out-of-pocket to your insurance company when you file a claim before your insurance coverage kicks in to cover the remaining costs. In Canada, the average collision and comprehensive deductibles are $500. However, deductible amounts can range between $250 and $1000.

Whether you're choosing a new car insurance policy or reviewing your current one, knowing how deductibles impact your insurance rates can help you make a smart decision based on your financial situation. Stick around to learn more about what you need to know about car insurance deductibles.

How to choose the right auto insurance deductible

As we said, premiums and deductibles are closely related. So, it's essential that you evaluate your financial situation and overall risk tolerance to determine how much financial responsibility you can comfortably handle out of your own pocket should you need to file a claim with your insurance company. We categorize the deductibles below into two types:

Higher deductible vs. lower deductible

We’ll review each type in detail and describe what it actually entails:

Lower deductible

A low deductible amount ranges between $250 and $500 and typically leads to higher monthly premiums for customers. However, you'll be less financially responsible when filing a claim following a car accident.

For example, if your comprehensive deductible is $500 and the repair costs required to fix your car after a tree fell on it are $3,000, you'll only pay $500 out of pocket, while your insurance pays $2,500. Lower auto insurance deductibles are suitable for those who want to minimize upfront insurance claim costs but are okay with paying a higher premium over the year.

Higher deductible

A higher deductible ranges between $750 and $1000. By opting for a higher deductible, you can secure lower premiums for your auto insurance policies, as you'll need to pay more at the time you file a claim.

For example, let's say you seek compensation from your insurance company after an at-fault accident under your collision deductible. The cost to repair your vehicle is $3,000, and your deductible is $1,000. You'll pay $1,000 while your insurance covers the remaining $2,000.

A higher comprehensive or collision deductible is suitable for those who can afford to pay a larger expense to their insurer in the event of an accident. When determining the appropriate insurance deductible, also consider.

Financial factors to consider

In 2022, the total amount of claims generated by the vehicle insurance industry in Canada was roughly $16.3 billion. Before determining your car insurance deductible, there are a couple of financial factors you need to consider:

• Your savings: Ask yourself whether you'll be able to pay your deductible and not feel any financial strain if you opt for a more expensive option.
• Your driving habits: Drivers who spend a lot of time on the road and drive in heavily populated areas with lots of traffic congestion could benefit from opting for an insurance premium increase to get a lower deductible.
• Vehicle market value: If you drive an older vehicle that's over 15 years old, you may want to consider opting for a higher insurance premium or removing comprehensive and collision coverage altogether.

Risks vs. rewards summary table

This table compares monthly premiums (what you pay each month) and deductibles (what you pay before insurance helps). Higher premium = lower deductible (more upfront cost, less risk later); lower premium = higher deductible (less upfront cost, more risk later). Pick the plan that matches your risk comfort, expected care use, and savings:

Common myths about car insurance deductibles

The insurance industry is riddled with myths and misconceptions that can lead to costly mistakes. We've debunked some for you below:

Myth 1: Higher deductibles can help you save money on your monthly premium

Numerous factors determine insurance premiums beyond deductibles, like your driving experience, where you live, the make and model of your vehicle, and more. So, even if you opt for a more expensive deductible, other factors used to calculate your risk profile may outweigh this decision.

If you want to receive an accurate car insurance quote based on the information above, contact BrokerLink today. As brokers, we do not bind coverage, but we can still provide you with a reliable quote that gives you an idea of how much a car insurance plan will cost you.

Myth 2: You don't have to pay your deductible if you aren't at fault

Provinces like British Columbia and Ontario have no-fault insurance systems. So, even if you weren't at fault, you may still need to pay your deductible.

Myth 3: All deductibles work the same

Deductibles can vary by coverage type. Collision and comprehensive policies often have separate deductibles. Read your insurance documents closely to learn more about what your policy states.

Situations where you may not have to pay a deductible to your insurance company

There are some scenarios where you may not have to pay a deductible when filing under your insurance policy:

• Uninsured motorist insurance: If you are hit by an at-fault driver who is either uninsured or underinsured, your insurer will cover repairs without you needing to cover expenses.
• Deductible waivers: Some insurers offer a deductible waiver endorsement that prevents policyholders from paying their deductible if they have a qualifying claim.
• Glass breakage: In some provinces, if you have comprehensive coverage and need to file a claim for a minor chip or crack in your windshield under your comprehensive coverage, your deductible may not be applicable.
• You have enhanced coverage: If you have enhanced coverage and your car is a total loss due to a fire, lightning, or theft, your deductible may be waived by your insurance company (this only applies in certain provinces).

Can I cancel an insurance claim?

Yes, you can cancel an insurance claim, and it's quite common. For example, if you are in a minor collision and file a claim under your auto policy with your insurance company for damages, but the repair costs are lower than your deductible amount, it may make sense to pay for your vehicle repairs on your own, rather than have your insurer pay for them.

This is because each time you submit a claim, you'll appear to be a greater risk to your insurer, which translates into higher insurance costs the next time you renew your coverage. So, proceed with caution and determine whether going through the claim process is worth it.

Can I change my deductible at any time?

Most insurers let you modify your deductible when your policy is up for renewal. Some providers may allow modifications midway through, but it depends on their underwriting processes and may vary by company.

How do I file an insurance claim and pay my deductible?

In the sections that follow, we discuss the process for filing an insurance claim and paying your deductible:

1. Inform your insurer and submit any relevant documents you need to prove there is damage to your car.
2. Your insurer will evaluate the damage and confirm the deductible amount you chose when purchasing your policy.
3. Once a quote for repairs has been completed, your insurance company will ask you to pay the deductible before your repairs begin.

How BrokerLink can help

Choosing the right deductible amount for your needs can be confusing, which is why the insurance professionals from BrokerLink are here to help. At BrokerLink, we help Canadians find affordable auto insurance. With access to numerous policies from some of Canada's top providers, our brokers can shop around on your behalf, compare rates, determine how different insurance deductible amounts can influence your insurance costs, and answer questions like: "Can I change my deductible after a car accident?" or "Can an auto insurance claim be denied? Some types of Toronto car insurance policies we can help with include:

• Third-party liability car insurance
• Uninsured motorist coverage
• Direct compensation-property damage (DCPD)
• Comprehensive coverage
• Collision coverage
• Accident forgiveness

Contact BrokerLink over the phone or use our online quote tool to get a free, customized insurance quote within minutes!

Get an auto insurance quote [phone]