Everything you need to know about your car insurance deductible

Whether or not a claim is subject to a deductible depends on the type of coverage you are claiming. Amanda Mitchell, national manager of auto product at The Co-operators, explains that liability insurance—which every vehicle on the road in Canada is legally required to have—does not carry a deductible. Liability insurance covers claims made against you, up to your coverage amount. This is required in case you happen to get into an accident and someone else is injured or their car is damaged. 

However, if you are claiming comprehensive coverage or collision coverage, a deductible will typically be applied. Whereas collision covers damage to your car from a single or multiple-vehicle crash, Mitchell notes that a comprehensive claim is for “anything else that damages the vehicle, like a storm or vandalism.”

These rules are standard among private insurance providers, but if you live in a province with public or hybrid automotive insurance programs—namely British Columbia, Manitoba, Saskatchewan or Quebec—you should confirm the details of your policy with your insurer. Whether or not a claim is subject to a deductible will depend on how your province handles that type of auto insurance claim.

The size of your deductible will ultimately depend on your policy and provider. “Generally, the higher the deductible, the lower the premium,” Mitchell says.

Do you have to pay a deductible when you’re not at fault?

Generally speaking, no. “If you’re not at fault, you usually would not pay a deductible,” Mitchell says of private insurance policy holders. In this case, the at-fault driver (and/or their insurer) would cover all costs. In some cases, it may be determined that both drivers are somewhat at fault and a percentage of fault will be assigned to each party in order to fairly process the claim.

What if you’re subject to a hit-and-run collision or not sure who sent a shopping cart careening into your car door in that parking lot? “That is covered under your collision or comprehensive coverage,” Mitchell says. She notes that deductibles may apply to these claims. These scenarios would be similar to making a home insurance claim after a weather event or electrical fire. 

If you have public auto insurance coverage, you may be eligible for direct compensation to cover any costs associated with your auto claim. But there are specific reporting regulations for claims in each province (for example, collision claims may be filed differently than hit-and-run claims). In all provinces other than Ontario and Quebec, you don’t have to pay a deductible for damage that’s caused by fire or lightning—or in the case of the theft of your vehicle.

What is the average auto insurance deductible?

In provinces with private coverage, the average auto insurance deductible is $500 on both collision and comprehensive coverage policies, according to Mitchell. The deductible on a public auto insurance plan may be similar, though specific conditions will apply. In Manitoba, for example, the default deductible is $750 (even on basic coverage) but there are options to reduce or waive it for a fee.

Auto insurance deductibles vary widely based on your province, the type of coverage and even your driving history. Depending on the insurer and the premium you want to pay, they can range from $250 to $2,000, so you’ll want to speak to your provider about what they can offer you. 

How to choose the best car insurance deductible

The right deductible for you depends on your ability to manage an unexpected expense (hint: always have an emergency fund) and other factors. Ideally, your insurance provider will take the time to assess your needs and recommend a deductible that best suits your budget. “If a client can handle a $2,000 deductible, they may take the lower premium [that comes with it].”

The best deductible is one that balances your monthly budget and your ability to manage a sudden large expense, Mitchell says. So, if you’re choosing between a $500 and $1,000 car insurance deductible, give your insurance provider an honest assessment of your cash flow and ask for their advice. Remember: These conversations should happen when choosing a policy rather than when making a claim—at that point, you’re stuck with the deductible you’ve got.

“It’s important to have a knowledgeable advisor, someone you can trust and have an open conversation with,” Mitchell says. Some drivers can easily afford a $1,000 or even higher deductible after an emergency and just want the lowest monthly premium available, whereas other drivers choose a slightly higher premium in order to lock in a lower deductible. “Worst case scenario, if [something] happens tomorrow—do you have $500 or $1,000, and what does that look like in terms of what you can comfortably afford?”

It’s important to seek customized advice and to have an understanding of your individual policy, because if something were to happen to you or your car, you’ll want to have solid coverage.

More on auto insurance:  

• Can you get affordable car insurance after a DUI?

• What is no-fault insurance? Why do you need it?

• Accident benefits have you covered—but for what, exactly?

• What DCPD insurance means to you

About Erin Pepler

Erin Pepler is a freelance writer based in the Toronto area. A frequent contributor to MoneySense, she is also the author of Send Me Into The Woods Alone: Essays on Motherhood.