What is an Auto Insurance Deductible?


Accidents can happen to any driver at any time, and that’s why auto insurance is a requirement for all licensed drivers in all provinces and territories in Canada. But purchasing auto insurance can often be confusing, and involve the use of terms and jargon that not everyone is familiar with. One such term is an auto insurance deductible – a commonly misunderstood part of an auto insurance policy.

What is an auto insurance deductible?

An auto insurance deductible is the amount of money that you will be responsible for before the insurance company begins to cover the repair costs in the event of an accident. For example, if you’re in an accident that causes $2,000 worth of damage to your car and your deductible is $500, you will have to pay $500 toward the repair before the insurance company covers the remaining $1,500.

How will my deductible affect my auto insurance premium?

Generally speaking, a higher auto insurance deductible will lead to a lower premium, since you’re accepting a larger portion of the financial burden in a claim situation. For many people, increasing the amount of their deductible is a good way to lower their premium, but it’s important to always choose a deductible that you can afford. Ask yourself how much you would be able to pay in the event of an accident without impacting your financial situation or lifestyle.

When do deductibles apply?

If your auto insurance policy covers liability only, you don’t have to worry about deductibles. If however, you carry collision coverage, comprehensive coverage, or both, you will have a deductible for each of these two options.

Collision Coverage:

Covers damage that is done to your vehicle when you’re involved in an accident with another vehicle, or a stationary object. Collision coverage will take care of the cost of repairs or replacements to your own vehicle, but not the damage that you cause to another person’s property.

When it comes to deductibles and collision coverage, the rules are forthright. If you are the one at fault, or partially at fault in an accident, and are making an insurance claim to repair your vehicle, you will then be responsible to pay the deductible amount before your insurance will cover the remaining portion of the damage. If you are not the driver at fault, the damage to your vehicle will generally be covered by the other driver’s liability insurance.

Comprehensive Coverage:

Covers damage that is done to your vehicle in all instances when your car does not actually collide with another vehicle or object. This includes things like falling objects, theft and vandalism, damage from animals, or natural disasters.

In most cases of comprehensive coverage claims, you will be responsible for the deductible, since there are no other drivers, and therefore no other insurance companies involved.

How to choose the right deductible

There are several considerations to take into account when deciding on the right deductible amount. The most important one is how much you can realistically afford to pay in a claim situation. Accidents can happen to even the best and most experienced drivers at any moment, so you must determine whether your current budget would allow you to pay the deductible, instead of only focusing on what your future financial situation might be.

It’s also important to keep in mind that auto insurance deductibles operate on a per-claim basis, so the frequency of your claims can make a big impact on the value of your policy. If, for instance, your auto insurance deductible is $1,000, and you are involved in 3 separate accidents in which the total damage in each was less than that amount, you will be responsible for 100% of the repair costs and your insurance will not provide coverage. Therefore, if your driving history indicates that you may need to make frequent claims, it would be worth considering a policy with a lower deductible.

When shopping for auto insurance, make sure to ask for quotes at several different deductible amounts, to see what the rate difference is. Ultimately, you’ll want to choose a deductible amount that you can afford in case of an accident, at a rate that you afford on a consistent basis.

PC® insurance offers a wide variety of insurance solutions that fit your needs at a great rate. Get a free, no obligation quote right here.

How to make a claim

Call 1-877-251-8656 to speak with a Claims Advisor.

Renewing your policy

Call 1-877-251-8652 for information regarding policy renewal.

Buying a new policy

Call 1-866-660-9035 for information on obtaining a quote.

Need help?

Take a look at the top 5 FAQs:

  • What are my choices in terms of auto coverage?

    What are my choices in terms of auto coverage?

    If you own or drive a vehicle in Canada, you must be insured. Different provinces have different requirements, but the four mandatory elements of auto insurance are:

    1. Liability - if you cause an accident and someone sues you
    2. Accident benefits - if you or someone in your vehicle is hurt in an accident
    3. Direct compensation – property damage (Ontario only)- if your vehicle gets damaged (and it's determined you're not at-fault or only partly at-fault)
    4. Uninsured motorist - if you're in an accident with an uninsured or hit-and-run driver
  • How do I reduce my insurance costs?

    How do I reduce my insurance costs?

    There are several things you can do to reduce your insurance premium costs:

    1. Work on your driving record
      Here's an easy, yet effective way to bring down your insurance costs: build a consistent accident and conviction-free track record with an insurance company.
    2. Choose your automobile wisely
      Do your research before you invest in a new car. Read consumer reports, and check with your insurance company to find out which cars tend to be targets for theft and vandalism. Remember, if you buy a car with a high theft rate, your premium will be higher.
    3. Adjust how you use your car
      By adjusting the way you use your vehicle, you can also bring down the cost of your insurance rates. If you live in a metropolitan area:
      • can you take the subway, train or bus to work?
      • has your job changed, or have you moved recently?
      • do you use your automobile to drive a short distance to work?
      • does your vehicle get used for low annual kilometers?
        If you answered yes to any of these questions, you may be entitled to lower insurance costs. Another consideration is whether you let others use your car. It is sometimes possible to exclude certain high-risk drivers from your policy so that good drivers are not penalized with a higher premium.
    4. Choose a higher deductible
      If you choose a higher deductible up front, your premiums will be lower.
    5. Review your coverage
      Take a closer look at your coverage to make sure you're not paying for things you don't need.
  • How can I earn PC Optimum points?

    How can I earn PC Optimum points?

    When you use your President's Choice Financial Mastercard to pay your PC auto insurance premium, you'll get 20 PC Optimum points per dollar of your premium.

  • Are other drivers insured to drive my car?

    Are other drivers insured to drive my car?

    Yes, as long as he/she has your permission to drive the vehicle, has a valid driver's licence and has not been specifically excluded from driving the vehicle. However, all licensed drivers in your household must be listed on your policy—regardless of how often they use your vehicle.

  • What is a deductible?

    What is a deductible?

    A deductible is the amount that you agree to pay towards the repair or replacement of your vehicle before your insurance pays the rest. You choose your deductible amount when you purchase your auto insurance. The higher your deductible, the lower your premium.

See all Auto Insurance FAQs


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