Understanding changes to policy deductibles

Reviewed by Rena Novotny

Updated September 11, 2023

A policy deductible is the amount you must pay out of your own pocket before your insurance provider will pay for any insured loss or damage. For example, let’s say your $1,500 laptop was stolen and you have a $500 deductible. In this case, you would be responsible to pay the first $500 out of your own pocket and your insurance provider would pay the remaining $1,000.

Underwriting checklist

Why deductibles change

Many home insurance providers, including Square One, are making changes to the policy deductibles they offer. New deductibles are being introduced and existing deductibles are being increased. These changes are a result of higher claim volumes and costs, which are largely due to:

  • changing weather patterns; and,
  • aging municipal infrastructure systems.

If your home is located in an area with a greater-than-usual history of claims, your insurance provider may increase your deductibles. This means you may be responsible for smaller losses but remain protected under your insurance for larger or catastrophic losses.

It’s also worth noting that many providers are eliminating lower deductible amounts. For example, $200 minimum deductibles are being replaced by $500 or $1,000 minimums. That’s because a $200 deductible is just too low by today’s standards. With a $200 deductible, the cost of handling a smaller claim is often greater than the payout made to the customer, and the future impact of lost claims-free discounts is often greater than the amount of money recovered under a small claim.

Listed below are some examples of policy deductible changes being made by Square One.

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Hail deductibles

As weather around the world continues to become more volatile, certain regions in Canada are susceptible to much more frequent and severe wind and hail storms. Together, hail can wreak havoc on the exterior of homes by tearing away some parts of the building envelope, while making it easier for water to subsequently enter through damaged areas. Insurance companies across Canada have taken different approaches to respond to this, with many companies restricting their roof coverage to “actual cash value” only; this means that claims for damage due to hail would be reduced according to the age of the roof.

Rather than taking that approach, Square One decided to introduce different deductibles in high-risk hail regions. This way, we can ensure that our rates remain affordable, without reducing the quality of the coverage that our customers receive. With Square One, as long as a customer’s roof has not exceeded its useful life, hail damage is covered up to the full cost of repair or replacement, subject to the policy’s limits and exclusions.

Glass deductible eliminated for condo owners

At one point, Square One offered condo owners different deductible options for glass that formed part of their condo units. These options are no longer offered because most condo corporations are responsible for damage to exterior glass. Condo owners who are responsible for damage to exterior glass have the option of purchasing our Condo Owner’s Protection, which is subject to the standard policy deductible.

Service line deductible

Service lines are the water, sewer, electrical, gas, and telecommunication lines that run underground from a house, connecting it to the main public lines (usually under the street). Many homeowners are surprised to learn that they are personally responsible for repair and replacement of these lines should they fail. For eligible homes, Square One offers service line coverage for many common types of damage to these service lines.

If you choose to add service line coverage to your policy, you’ll see a “service line deductible” in your policy wordings. This is the deductible you’ll pay if you make a claim for damage to your property’s service lines.

While the service line deductible is listed separately, it is the same amount as your standard policy deductible. If you choose to change your standard deductible, your service line deductible will automatically change to match.

Insurance is designed to take care of large losses which can cause significant financial damage to your family. Appropriate deductibles can help to keep your insurance premiums as competitive as possible, while preserving your coverage for those critical incidents when you really need it.

Want to learn more? Visit our Home Insurance Basics resource centre for dozens of helpful articles to guide you through the ins and outs of home insurance. Or, get an online quote in under 5 minutes and find out how affordable personalized home insurance can be.

About the expert: Rena Novotny

Rena's 23-year career started as an independent adjuster where she specialized in complex property, liability and special risk loss. As a branch manager, Rena hired, trained, mentored and coached several adjusters. She continues part-time post-graduate studies in neuro-psychology and traumatization, learning how both may impact the insured's engagement on catastrophic claims. Rena has a MA (Conflict Analysis and Management), CRM, CIP, and holds a level 3 adjusting license.


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