Car Insurance Deductibles Explained

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By Aren Mirzaian
Last updated on March 16, 2026

5 minute read

MyChoice follows a strict content review process designed to ensure reliable and unbiased information.

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How Car Insurance Deductibles Work at a Glance

  • A car insurance deductible is the amount you pay yourself on a claim before your insurance company pays the rest for repairs or replacements.
  • Deductibles usually apply to collision and comprehensive coverage.
  • If you choose a higher deductible, your insurance premiums are usually lower. A lower deductible often means you’ll pay more each month for coverage.
  • If the repair costs are less than your deductible, your insurer won’t pay anything. In these cases, it might make more sense to pay for the repairs yourself instead of making a claim.
  • There are several types of deductibles, including collision, comprehensive, and disappearing deductibles. Disappearing deductibles get smaller over time if you don’t make any claims.
  • The best deductible for you depends on things like your budget, where you live, and how likely you are to make a claim.
How to Choose the Right Car Insurance Deductible

What Is a Car Insurance Deductible?

A car insurance deductible is the amount you must pay out of pocket toward a covered claim before your insurer pays the remaining costs.

For example, let’s say that you’re making a claim for a $1000 repair on your car with a $100 deductible. The total amount you can actually claim from your insurer will be $900, and you can only claim it after you pay the first $100. The other $100 will have been “deducted” from the claimable amount (i.e. shouldered by you), hence the term “deductible”.

How Do Car Insurance Deductibles Work?

Car insurance deductibles work in two ways:

  1. After confirming the total cost of repairs for your car, your insurance company will issue you a cheque amounting to the total cost of repairs, minus your deductible.
  2. Many insurance companies have ties with repair shops, and going to one of them could make the claims process easier. In these cases, your insurer will pay the shop directly for the costs of repair up to your claimable amount. You will then have to settle the rest (your deductible amount) with the shop upon picking up your car.

In both cases, while your insurer will shoulder the brunt of the cost, the deductible amount will come from you.

When Do You Pay Deductible Car Insurance?

You typically pay a deductible when filing a claim that includes a deductible under your policy, such as collision or comprehensive coverage. Some claims do not require a deductible, such as certain not-at-fault accidents under DCPD in Ontario, which often has $0 deductible.

Having a deductible can be helpful for costly repairs, as it establishes a “ceiling limit” to how much you’ll have to shell out, while your insurer covers the rest. But how about for instances where the cost of repairs totals less than your deductible?

Insurers take your deductible into account before shouldering any costs. Thus, if your deductible is higher than the cost of repairs, it may be more economical to just pay out of pocket instead of filing a claim. 

In this sense, when you file a claim, the deductible is the portion of the repair cost you are responsible for paying when you make a claim.

Types of Auto Insurance Deductibles

Some of the most common types of auto insurance deductibles are:

Collision insurance deductible

Collision insurance covers the cost of repairing or replacing your vehicle if it gets damaged in an accident. Your deductible depends on whether you were at fault or responsible for the accident. If you were the one at fault, you would be charged the full deductible amount. If you are not at fault, your deductible may be waived depending on the type of claim (for example, under Direct Compensation Property Damage coverage in Ontario).

Comprehensive insurance deductible

Comprehensive insurance covers repairs or replacement of your car in the case of other types of damage, such as vandalism, fire, or theft. Comprehensive claims usually require you to pay your comprehensive deductible, unless your policy includes special deductible waivers.

Disappearing deductible

A disappearing (or vanishing) deductible can be added on top of your coverage to further lower the cost of your premium. For each year you do not file, your payment is reduced by a percentage, which varies per insurer. However, take note that not all insurers offer this option, and if they do, you will need to qualify to apply. 

These are just some of the different types of auto insurance deductibles out there. Make sure to talk to your insurance broker and ask the right questions so you can get the best deal for you.

Should You Get Deductible Car Insurance?

Whether or not you should get deductible car insurance is ultimately up to you. One advantage of getting deductible car insurance is that it can actually lower your insurance premiums.

In a nutshell, you can think about insurance premiums and insurance deductibles having an inverse relationship. That is, when one goes up, the other goes down. Your insurer may offer lower premiums if you agree to pay a higher deductible, which could save you money in the long run. If you don’t see yourself filing claims that often, this might be a good arrangement for you.

On the other hand, having a higher deductible means that you’ll have to shell out more each time you make a claim. Remember also that your deductible is considered first when making a claim, so setting your deductible too high could work against you in practice.

Here’s an example: let’s say you get involved in an accident and the total cost for repairs totals less than your deductible. If the repair cost is less than your deductible, the insurer will not pay anything, and you would typically cover the repair cost yourself.

Having car insurance with a deductible could benefit you by lowering your monthly premium, but setting it too high could defeat the purpose of having it in the first place.

Factors to Consider When Setting Your Car Insurance Deductible Amount

Here are some factors to consider when setting your car insurance deductible amount:

As the policyholder, you have the liberty to set your deductible amount. Ask yourself how much you can budget each month for your insurance premium. Can you afford to pay a little more? Or do you need more cushion for daily expenses? Try to picture yourself making an insurance claim, too. Will you be able to pay the deductible?

Take the time to consider your financial situation so you can set a realistic deductible insurance amount. In addition, many insurance companies offer alternative solutions for folks who can’t afford car insurance.

If you live in a big city like Toronto or Montreal, the chances of getting into a car accident are greater than if you live in a sleepy, rural town. If your area doesn’t see a lot of car accidents, increasing your deductible might be a good idea. 

Being in a low-traffic area means that you’re less likely to get in an accident and file a claim. And with a higher deductible, your premiums will be decreased — meaning, more savings for you in the long run.

Since you’ll have to pay the deductible amount each time you make a claim, you should assess how often you see yourself making insurance claims. If you live in a high-traffic area with lots of cars or get into a lot of accidents, lowering your deductible might be your best option. You’d have to pay a higher premium, but at least you wouldn’t have to shell out as much on each repair, especially for small damages.

Key Advice from MyChoice

  • Pick a deductible you could actually pay if you had an emergency.
  • If you want to lower your insurance premiums and you don’t file claims often, think about choosing a higher deductible.
  • Don’t set your deductible too high. Smaller claims might not be covered at all, so you’d have to pay the full repair cost yourself.

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