Insurance

Deductibles

A deductible is the portion of a covered claim that you pay before the insurer pays the remaining eligible amount.

4 min

Insurance 101 • 04

A deductible is the part of a covered loss you keep.

You pay that amount before the insurer covers the remaining eligible claim, subject to the policy.

Deductibles reduce small claims and share risk between you and the insurer.

They are common in home, auto, health and other types of insurance.

A deductible affects

01How much you pay after a loss02How much the insurer may pay03The value of making a small claim04Often the premium you pay

Deductible and exclusion are not the same.

01

Deductible

The loss may be covered, but you pay part.

02

Exclusion

The policy does not cover that event or circumstance.

The deductible comes out of the covered claim.

Covered loss$5,000
Deductible$1,000
Potential insurer portion$4,000
Other limitsMay still apply

A higher deductible can lower premiums, but it increases the amount you must absorb.

The cheaper policy is only useful if you could actually pay the deductible when needed.

Choose a deductible by considering

01Your emergency savings02How much premium changes03How large a loss you could absorb04Whether different claims use different deductibles

Remember this

The deductible is your share of the covered loss.

Make sure that share is affordable before choosing a policy.

Lesson complete

Reviewed 2026-08-18

Sources

Financial Consumer Agency of CanadaHow insurance works ↗Financial Consumer Agency of CanadaMaking an insurance claim ↗
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