A car insurance deductible is the dollar amount you agree to pay out of pocket on certain auto insurance claims. Once your deductible is satisfied, your insurance company pays the remainder of your repair costs, up to any applicable policy limits.

Deductibles only apply to physical damage claims for your own vehicle, not to liability or accident benefits claims.

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How does a car insurance deductible work?

In most cases, you don’t make an actual payment to satisfy your deductible. Instead, your insurance company will simply subtract (that is, deduct) your deductible amount from the final claim cheque.

For example, let’s say a falling tree limb badly damages your car’s roof, and the repair shop quotes you $3,000 to repair the damage. Your comprehensive deductible is $500.

Your insurance company will now pay up to $2,500 for the repairs. They’ll want to send an adjuster to verify the extent of the damage and confirm the mechanic’s estimate of the total cost to repair it. If they agree, they may send you a cheque for $2,500 or, if you bring your car to a preferred repair shop in the insurer’s network, you may pay your deductible directly to the repairer.

Why car insurance deductibles exist

Auto insurance deductibles are a form of risk sharing that keeps the overall cost of car insurance low.

Without deductibles, car owners could file insurance claims for damage as minor as $50 or $100. That repair bill doesn’t cost the owner much, but when thousands of policyholders make claims for that amount, the cost to insurance companies adds up quickly.

Deductibles shift financial responsibility for those minor repair costs onto policyholders, meaning that insurance companies can charge less in premiums and deliver reliable payouts on major claims that individual car owners wouldn’t be able to cover without insurance.

Always pay your deductible

While paying a deductible reduces your overall claim amount, it’s important to pay it every time you make a claim. Deductible waivers are a major form of insurance fraud, and you should not trust any mechanic or body shop that offers you one.

The only situations in which you can avoid a deductible are:

If your insurance company declares your vehicle a total loss: In some cases, insurers will waive the deductible on total loss claims.
If your insurer offers disappearing deductibles: Some insurers reward safe drivers by reducing deductibles by a certain percentage each year you don’t make a claim.

Car insurance deductible vs. premium: What’s the difference?

Your car insurance deductible is the amount you pay out of pocket in the event of a claim. Your car insurance premium is the amount you pay on a regular basis (monthly or annually) to keep your policy active.

Both are payments, but you only pay your deductible if you’re making a claim to which a deductible applies. (Not all car insurance claims involve deductibles—more on this in a minute.)

	Deductible	Premium
When you pay it	Only when making a claim for vehicle repairs	Annually or monthly on a set payment schedule
Why you pay it	To share accident costs with your insurer and reduce your premium costs	To maintain your car insurance coverage
When it changes	When you choose to change it	When your insurer renews your policy

When do you pay a car insurance deductible?

You pay a car insurance deductible when your own vehicle is repaired or replaced through a collision or comprehensive insurance claim.

If you need to pay a deductible, you’ll pay your mechanic after repairs are completed. If your insurance company pays the mechanic directly, or if you’re dealing with a total loss claim, you may not “pay” the deductible directly; instead, it will simply be deducted from the final payout your insurer issues.

You typically do not pay a deductible when:

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Your vehicle is damaged by another driver: Damage from not-at-fault collisions may be covered by DCPD or uninsured automobile coverage, whichever is applicable.
You file an accident benefits claim: There’s no deductible associated with statutory accident benefits.
Another party makes a liability claim on your insurance: Liability insurance doesn’t involve deductibles.
Your repairs cost less than your deductible: If the damage to your vehicle from a minor fender bender costs less to repair than the amount of your deductible, you’ll simply pay for the repairs out of pocket. Because no insurance payout is involved, your payment isn’t a deductible.

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What types of car insurance have deductibles?

Deductibles generally only apply to the types of coverage that deal with physical damage to your car. Those include:

Collision coverage
Comprehensive coverage
Specified Perils/All Perils coverage
Uninsured automobile coverage
Direct Compensation Property Damage (DCPD) coverage (rare)

You’ll get to select a deductible for each of these parts of your insurance policy. In some cases, you might want to choose different levels of deductible for different coverage to customize how you’re able to use your coverage.

For example, you might choose a $500 deductible for your comprehensive coverage to ensure that it’s easy to make a claim in the event of severe damage or theft, but opt for a higher collision deductible, like $1,000.

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Car insurance without a deductible

Liability coverage and no-fault medical coverage, such as statutory accident benefits, typically don’t involve a deductible.

How to choose the right car insurance deductible

Your chosen deductible affects the amount you’ll pay for insurance coverage.

The rule of thumb: A lower deductible means higher premiums, and a higher deductible means lower premiums.

Take your overall financial situation into account when selecting a deductible. The higher your deductible, the less you’ll pay month to month, which could be an advantage if you’re trying to save money or going through a tight patch.

But if you raise your deductible too high, you could essentially make your coverage useless. If you can’t afford your deductible, you can’t afford to make a claim.

When choosing a deductible, think about:

How much you have in savings or emergency funds
How much a high deductible would save you in premiums over one year
The maximum repair cost you’d be comfortable covering on your current budget vs. making an insurance claim

To see how adjusting your deductibles could change your monthly premium, consider the example below of 16 deductible-adjusted quotes for the same base policy for a 45-year-old single male driver with a clean driving record in London, Ontario:

	$500 comprehensive deductible	$1,000 comprehensive deductible	$1,500 comprehensive deductible	$5,000 comprehensive deductible
$500 collision deductible	$124.34	$122.06	$120.37	$114.29
$1,000 collision deductible	$123.07	$120.80	$119.10	$113.03
$1,500 collision deductible	$121.97	$119.69	$118.01	$111.93
$5,000 collision deductible	$116.32	$114.04	$112.35	$106.27

^*^{Quotes are for a 2019 Honda Civic Sport with no history of accidents or tickets and include $1M liability coverage and all accident benefits except for indexation and dependent care. Prices are current as of August 2026.}

If you own an older vehicle, raising your deductible may be a practical way to keep costs low without dropping physical coverage altogether. Weigh the out-of-pocket cost of a claim against your car’s actual cash value and the monthly savings from a higher deductible.

Absolutely — here’s the same HTML with all the values replaced with your new figures:

	$500 comprehensive deductible	$1,000 comprehensive deductible	$1,500 comprehensive deductible	$5,000 comprehensive deductible
$500 collision deductible	$72.59	$71.32	$70.48	$67.52
$1,000 collision deductible	$72.00	$70.73	$69.89	$66.93
$1,500 collision deductible	$71.41	$70.15	$69.29	$66.35
$5,000 collision deductible	$68.37	$67.11	$66.26	$63.31

^*^{Quotes are for a 2013 Kia Rio with no history of accidents or tickets and include $1M liability coverage and all accident benefits except for indexation and dependent care. Prices are current as of August 2026.}

You could save $10–$20/month, on average, by adjusting your collision and comprehensive deductibles.

Maximum savings for a 2019 Honda Civic Sport: $18.07/month
Maximum savings for a 2013 Kia Rio: $9.28/month

Over the course of a single year, higher deductibles could save you $120–$200+.

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Is a high or low deductible better?

There’s no single “right deductible” that works for every driver. Both high and low deductibles come with advantages and disadvantages.

High deductible

You’ll pay lower premiums and may make fewer claims overall, meaning you’re less likely to see your premiums rise.

It’s more expensive to make a claim. Many repair bills will fall below or just over your deductible amount, making your auto insurance policy less valuable.

Low deductible

Claims won’t carry high out-of-pocket costs, making your policy more powerful in the event of auto damage.

You’ll pay more to maintain your coverage. Since your premiums are consistent, you may end up paying more for the low deductible than you’d save in the event of a claim.

Remember, a single car insurance policy might have multiple types of deductibles that can be set at different amounts. You can find a balance between high and low deductibles by selecting a low deductible for one type of coverage and a higher deductible for another.

“In trying to reduce their premiums, people generally increase their deductibles significantly. The maximum deductible they can have in certain cases is $5,000. If your vehicle is worth $5,000 and you have a $5,000 deductible, you’re basically paying the entire value of the car out of pocket to get it repaired. So it’s important to consider the trade-offs in terms of value vs. deductible.” —Reza Aziz, RIBO-licensed insurance broker

Not sure what your deductible should be?

Setting a deductible can be a hard decision. If you want expert guidance, you may want to speak with a licensed insurance advisor who can look over your insurance contract and offer some recommendations.