A car insurance deductible is the amount you pay yourself when you make a claim for damage to your own car. The insurer pays the covered cost above that amount. In Ontario, deductibles apply to optional coverages such as collision, comprehensive and all perils. A higher deductible often lowers your premium, but it raises your cost when a claim happens.
Key takeaways
- A deductible is your share of a covered claim on your own car, paid before the insurer pays the rest.
- Collision and comprehensive can have separate deductibles; all perils combines both under one.
- A higher deductible often means a lower premium, but how much varies by insurer.
- Choose an amount you could pay tomorrow without stress, and check any lender limit.
What a deductible is
Think of a deductible as the first slice of a repair bill that belongs to you. Suppose your 2021 compact SUV is damaged in a Toronto parking lot and the covered repair cost is a certain amount. If your deductible is, say, $500, you pay that $500 and the insurer pays the rest of the covered cost. The numbers here are only an illustration. Your own deductible is whatever you choose and your policy shows.
A deductible is chosen when you buy or renew the policy. It is not a fee you pay every month. You only feel it when you make a claim that is covered.
It also helps to know what a deductible is not. It is not a penalty, and it is not a payment to the insurer for the privilege of having a claim. It is simply the part of a covered loss that stays with you. If the covered repair cost is lower than your deductible, there is nothing left for the insurer to pay, so many drivers choose to handle very small repairs themselves rather than claim.
Deductibles are part of the pricing picture. Our guide on how Ontario car insurance rates are calculated lists the factors insurers look at, and coverage choices and deductibles are among them.
Where deductibles apply in Ontario
Ontario auto policies have mandatory and optional parts. The mandatory parts are third-party liability, statutory accident benefits and uninsured automobile coverage. Deductibles for damage to your own vehicle belong to the optional coverages. If you want a full picture of both layers, read our article on Ontario car insurance coverages.
Collision
Collision pays to repair or replace your car after it hits something or is hit, such as another vehicle, a pole or a guardrail. You choose a collision deductible, and you pay it before the insurer pays the rest of the covered cost.
Comprehensive
Comprehensive covers non-collision damage. Typical examples are theft, vandalism, fire, hail and a falling tree branch. It has its own deductible, which you can often set at a different level from your collision deductible.
All perils
All perils combines collision and comprehensive into one coverage with one deductible. That can make things simpler, because you only have one number to remember. The trade-off is that you cannot set the two deductibles separately. Our article on collision, comprehensive and all perils compares the three in more detail.
| Coverage | What it pays for | Deductible |
|---|---|---|
| Collision | Damage from hitting something or being hit | Its own deductible |
| Comprehensive | Theft, vandalism, fire, hail, falling objects | Its own deductible |
| All perils | Collision and comprehensive combined | One deductible for both |
Other situations to ask about
Some situations can work differently. For example, if someone else is at fault, a claim for your car may be handled under Direct Compensation Property Damage (DCPD), which repairs your car under your own policy. Ontario has allowed drivers to opt out of DCPD since 1 January 2024 through an endorsement, and opting out has real trade-offs. How a deductible applies in these cases depends on your policy, so check your policy and ask your broker.
The trade-off: deductible versus premium
This is the heart of the choice. There are two ways you pay for car insurance. One is the premium, the regular price of the policy. The other is the deductible, the part you pay at claim time.
- Higher deductible: the premium is often lower, because you carry more of each claim yourself. But if you make a claim, you pay more out of pocket.
- Lower deductible: the premium is often higher, because the insurer carries more of each claim. But if you make a claim, you pay less out of pocket.
How big the premium difference is varies by insurer, by your car and by your driving record. There is no single rule that applies to everyone, so we do not quote a figure here. The practical way to see it is to ask a broker for the same coverage at two or three deductible levels and compare them side by side.
Two cautions apply. First, a lower premium is only a real saving if you can afford the higher deductible when it matters. Second, many drivers go years without a claim, but nobody can predict when one will happen. A high deductible is a bet that you can absorb the cost, not a guarantee that you will not need to.
A worked comparison makes this concrete. Imagine two quotes for the same car and the same coverage, one with a $500 deductible and one with a $1,000 deductible. The second quote is likely to be cheaper each year. Now ask how many years of savings it would take to make up the extra $500 you would pay in a single claim. If the answer is many years, the lower deductible may be the calmer choice. If the answer is only a year or two, the higher deductible may make sense. These figures are only an illustration of how to think, not a prediction of any real quote.
For other ways to manage your costs, see our guide on how to lower your car insurance premium in Ontario.
How to choose a deductible
Here is a simple way to think it through.
1. Start with your savings
Ask yourself what you could pay tomorrow if your car were damaged. If a certain amount would cause real stress, do not pick a deductible at that level, even if it looks attractive on the quote. A deductible you cannot pay may leave your car unrepaired.
2. Consider the car
A newer or financed car often justifies strong own-vehicle cover. An older, paid-off car may not justify the same level of collision cover, and the value of the car matters when you weigh a deductible against the premium. Liability should stay strong either way.
3. Check what your lender requires
If your car is financed or leased, the lender or leasing company usually requires collision and comprehensive and may set a maximum deductible. Read your contract or ask the lender.
4. Think about your claims history
If you make claims often, a lower deductible may feel more comfortable. If you rarely claim and have a healthy emergency fund, a higher deductible may suit you. Remember that a claim can also affect your future rates, and the effect depends on the insurer and the claim.
5. Compare real quotes
Ask for the same coverage at different deductible levels. Compare the premium difference with the extra amount you would pay in a claim. Then decide whether the saving is worth the risk.
Common mistakes to avoid
- Picking the lowest premium without checking the deductible. Two quotes can look similar in price and differ widely in what you pay at claim time. Compare both numbers.
- Forgetting that comprehensive has its own deductible. If you have collision and comprehensive separately, check both numbers on your declarations page.
- Choosing a deductible you cannot pay. Pick a number you could cover without borrowing.
- Ignoring a lender's limit. On a financed or leased car, a deductible above the lender's maximum may not be accepted.
- Not reviewing at renewal. Your finances and your car change. Look at your deductible each year and ask whether it still fits.
What to ask your broker
- What are my current deductibles for collision, comprehensive or all perils?
- How would my premium change if I raised or lowered each deductible?
- Is it better for me to have all perils with one deductible, or separate coverages?
- Does my lender or lease set a maximum deductible?
- How does a deductible apply if another driver is at fault, and have I opted out of DCPD?
- How might a claim affect my renewal price?
Ontario brokers are licensed by RIBO, and consumer information is available from FSRA and the Insurance Bureau of Canada.
Before you act
Take out your current policy and find the declarations page. It lists your coverages, limits and deductibles. Write down your collision and comprehensive deductibles, or your single all perils deductible, and decide whether you could comfortably pay that amount tomorrow. When you are ready to compare options, you can request an auto insurance quote or read about auto insurance on our site, and ask for several deductible levels so the trade-off is clear.
Reviewed October 2026. This article is general information and not insurance or legal advice. Rules change, so confirm the details with a broker and the official sources listed with this article.
