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What is a deductible for car insurance?

A deductible is the payment you must make when you make a successful insurance claim, even if your insurer will cover most of the costs. Think of it as the basic amount that you have to cover yourself before your insurance starts. For example, if an auto repair costs $2,500 and your deductible is $1,000, you’ll pay $1,000 and your insurer will cover the remaining $1,500. However, if the repair costs are less than your deductible, you will have to pay the full amount yourself without going through your insurer.

Whether a claim is covered by a deductible will depend on the type of coverage you are claiming. Amanda Mitchell, national auto products manager at The Co-operators, explains that liability insurance — which every vehicle on the road in Canada is required by law — has no deductible. Liability insurance covers claims made against you, up to your cover amount. This is necessary in case you have an accident and someone else is injured or their car is damaged.

However, if you claim comprehensive or collision coverage, a deductible will usually be applied. While a collision covers damage to your car from an accident involving one or more vehicles, Mitchell notes that an extended claim is for “anything else that damages the vehicle, such as a storm or vandalism.”

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

The amount of your deductible ultimately depends on your policy and provider. “In general, the higher the deductible, the lower the premium,” says Mitchell.

Do you have to pay a deductible if you are not in debt?

Not generally. “If you’re not in debt, you wouldn’t normally pay a deductible,” Mitchell says of private insurance holders. In this case, the guilty driver (and/or their insurer) would cover all costs. In some cases, it can be determined that both drivers are at fault to some extent and a percentage of the blame is assigned to each party to process the claim fairly.

What if you are the victim of a collision due to a collision or are unsure who sent a shopping cart through your car door in that parking lot? “That falls under your collision or extended coverage,” Mitchell says. She notes that a deductible may apply to these claims. These scenarios are similar to filing a home insurance claim after a weather event or electrical fire.

If you have public auto insurance, you may be eligible for direct compensation to cover all costs associated with your auto claim. But there are specific claims reporting rules in each province (for example, collision claims may be filed differently than hit-and-run claims). In all provinces except Ontario and Quebec, there is no deductible for damage caused by fire or lightning, or in the event of the theft of your vehicle.

This post Everything you need to know about your car insurance deductible

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