Kanetix Forum

My car insurance deductibles are set to $300, but my friend's is $1,000. Why the difference? What should my deductibles be set at? What is a disappearing deductible?

A deductible is the portion of an insurance claim you agree to pay. The lower the deductible the less a policyholder will be out-of-pocket at the time of a claim. While this might sound great, it does come at a price; slightly higher premiums. Of course the reverse is true too, the higher the deductible the lower your auto insurance premium.

A person¿s tolerance for how much they are willing to set their deductible to will vary. What is right for one person may not be right for another. Talk to your insurer to go over your deductible options if you feel your deductibles are too low.

A disappearing deductible is offered by some, but not all, insurance companies. Basically the way it works is like this:

If you do not have any accidents for several years the insurance company will continually decrease your deductible for any future accidents, minimizing how much you may be out-of-pocket in the event of a claim. Even though they decrease your deductible they will not raise your premiums. Remember what I said above, lower deductibles come with a price. But with a disappearing deductible this isn¿t the case. This is a type of value added reward for having a claims-free driving record over a period of time.

Sean Graham, Principal Broker at KTX Insurance Brokers.

Neither Kanetix® nor the KanetixForum.ca is an insurance broker or agent. Although this information has been passed along to you from KTX Insurance Brokers through the Forum, we are not responsible for the opinions expressed by them. Insurance can be complicated. When reading these answers, keep in mind each person¿s situation is unique. Individual responses may vary depending on your insurer, geographic location, and specific circumstances. If you have a similar situation, always speak with your insurance provider, or a licensed insurance representative, for terms and conditions that may apply to you.