The amount of money a policyholder must pay out of pocket before the insurance company begins to pay on a claim. Higher deductibles generally result in lower premiums. For example, if you have a $1,000 deductible and file a $5,000 claim, you pay the first $1,000 and the insurer covers the remaining $4,000.
Understanding deductible is important for Canadian insurance consumers because it directly affects how your coverage works and what you can expect when you need to use your insurance. This is a foundational insurance concept that applies across multiple types of coverage and is worth understanding regardless of what insurance you carry.
If you have questions about how deductible applies to your specific insurance needs, speaking with a licensed insurance broker can help clarify your options and ensure you have the right level of protection.
You have a $1,000 deductible on your auto insurance. After a fender-bender causing $3,500 in damage, you pay $1,000 and your insurer covers the remaining $2,500.
The amount of money a policyholder pays to an insurance company for coverage, usually on a monthly, quarterly, or annual basis. Premiums are calculated based on factors such as the level of risk, type and amount of coverage, deductible, and the policyholder's history. In Canada, auto insurance premiums vary significantly by province.
A formal request made by a policyholder to an insurance company for payment or compensation for a covered loss or event. The claims process typically involves reporting the incident, providing documentation, having the damage assessed by an adjuster, and receiving payment according to the policy terms.
A provision in property insurance that requires the policyholder to insure their property to a certain percentage of its value, typically 80%. If the property is underinsured, the policyholder becomes a co-insurer and must absorb a proportional share of the loss. For example, if you insure your home for only 60% of its value with an 80% co-insurance clause, you would only receive 75% of any claim.
A licensed insurance broker can explain how deductible applies to your specific situation and help you find the right coverage.
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