A deductible is a predetermined amount that you must pay out-of-pocket before your insurance coverage starts sharing the costs. It is a key feature of many types of insurance coverage, including health insurance, automobile insurance, and homeowners insurance. In general, the higher the deductible, the lower the premium, and vice versa. Here are some key points to understand about deductibles:
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Definition: A deductible is the amount paid out of pocket by the policyholder before an insurance provider will pay any expenses.
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Types: Deductibles are normally provided as clauses in an insurance policy that dictate how much of an insurance-covered expense is borne by the policyholder.
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Amount: The amount of the deductible is usually quoted as a fixed quantity and is a part of most policies covering losses to the policyholder.
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Application: Depending on the policy, the deductible may apply per covered incident, or per year.
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Health Insurance: In health insurance, a deductible is the amount you pay for covered health care services before your insurance plan starts to pay. After you pay your deductible, you usually pay only a copayment or coinsurance for covered services, and your insurance company pays the rest.
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Automobile Insurance: In a typical automobile insurance policy, a deductible applies to claims arising from damage to or loss of the policyholders own vehicle, whether the damage or loss is caused by accidents for which the holder is responsible or by vandalism or theft.
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Homeowners Insurance: In homeowners insurance, a deductible applies to claims arising from damage to the policyholders property, such as from a fire or a storm.
