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What Is a Deductible?
A deductible is the amount you pay out of pocket before your insurance kicks in. For example, with a $1,000 deductible on a $5,000 claim, you pay $1,000 and your insurer pays $4,000.
Learn what a deductible is, how it affects your premium, and how to choose the right amount.
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A deductible is the amount you pay out of pocket before your insurance kicks in. For example, with a $1,000 deductible on a $5,000 claim, you pay $1,000 and your insurer pays $4,000.
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Choosing a higher deductible lowers your monthly or annual premium because you're agreeing to absorb more of the risk yourself.
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Auto insurance deductibles in Canada typically range from $300 to $2,500. Home insurance deductibles often start at $500 and can go up to $5,000.
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A good rule of thumb: never set your deductible higher than what you can comfortably pay from your emergency fund at a moment's notice.
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Some insurers offer disappearing deductible programs that reduce your deductible for each claim-free year — ask your broker if this is available.
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A licensed insurance broker can model different deductible scenarios so you can see exactly how each option affects your premium and out-of-pocket risk.
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