What Does Deductible Insurance Mean for Car Owners?

What Does Deductible Insurance Mean for Car Owners?

Written by DriveAxis.ca February 08, 2023

Most car drivers have heard of the term "insurance deductible," which relates to the amount of money that must be paid out of pocket before the actual insurance coverage kicks in. In Canada, insurance deductibles can vary depending on the type of coverage you have, and the particulars of your chosen insurance company.

Still, deductible insurance still confuses people due to the way it’s structured. Failure to understand it can mean paying more for insurance in the long run. There are also benefits and drawbacks to setting the amount of your deductible, which is why it’s important to understand the fundamentals before making a decision.


An insurance deductible is the amount of money that you are responsible for paying before your insurance company starts to cover the costs of an accident or claim. For example, if you are involved in a car accident, and the total damage to your vehicle equals $10,000 dollars, your deductible represents the amount of money you need to pay out of pocket to offset a portion of the repair amount. If your deductible is set to $1,000 dollars, your insurance company will pay the remaining $9,000.

It’s important to understand this when choosing your deductible amount. Opting for a smaller deductible means that the insurance company will be expected to pay out more money in the event of an accident. That means you’ll end up paying a higher annual premium in most cases. However, if you choose a higher deductible amount, your rate may be lowered.


In Canada, it is common to come across two main types of insurance deductibles - the standard deductible, and a “disappearing” deductible. The former represents a fixed amount that you must pay every time you make a claim. For example, if your deductible is set to $500, and make a claim for $3,000, you will have to pay $500, and your insurance company will cover the remaining $2,500.

A disappearing deductible, on the other hand, is a type of deductible that decreases over time. For instance, if you have a disappearing deductible of $500, and you manage to go a certain number of years without making a claim, your deductible may decrease to $250, or be eliminated entirely. This type of deductible is designed to reward safe drivers who do not make claims. Typically, a disappearing deductible is less common than a standard one, and it may also involve paying a fee to take advantage of.


Several factors can affect the amount of your insurance deductible in Canada. One of the main factors is the type of coverage you’ve chosen. Depending on the policy in question, the deductible amount may fluctuate, such as what tends to happen with comprehensive coverage. In this instance, a higher deductible may be warranted, as opposed to collision coverage.

Vehicle type can also affect your deductible, for the same reason that insurance rates tend to go up for specific kinds of cars. For example, if you drive a high-performance sports car, your deductible may be higher than if you drive a sedan, because it is assumed that the driver will engage in riskier behavior behind the wheel, or be unable to control its power. While it may not seem fair, the policy is backed by statistical data.

Naturally, your driving record can also affect your deductible in subtle or extraordinary ways. If your driving record is littered with a history of traffic violations, insurance cancellations and fender benders, you may be required to sign up for a higher deductible. This goes for young drivers, as well, since their level of driving experience is far less than a seasoned adult with years of practice driving in many different types of scenarios.


An insurance deductible is designed to protect your insurance company from having to pay for small claims, some of which are frivolous in nature. By requiring you to pay a portion of the costs, your insurance company can help maintain lower premiums. Additionally, having a deductible can encourage safe driving habits by forcing drivers to think twice about risky maneuvers and careless behavior. By offsetting a partial amount of the cost and putting responsibility on the driver, insurance companies can help mitigate the costs of accident claims, even by a small amount.


Understanding insurance deductibles is an important part of being a responsible driver in Canada. By understanding how deductibles work, and the factors that can affect them, you can make informed decisions about your insurance coverage. Whether you opt for a standard or disappearing deductible, make sure you choose a policy that provides the right level of coverage for your needs and budget.

If you’re interested in buying a car, but you aren’t sure whether you can handle the insurance costs, contact DriveAxis today. We’ll examine your situation and help you choose a car that you’ll love, with an insurance rate that won’t break the bank!

Email Address
Please Wait