What is an insurance deductible?

An insurance deductible represents the amount of money that a policyholder is responsible for paying out-of-pocket before their insurance coverage kicks in. This means that when a claim is made, the insured must cover the cost up to the deductible amount, and only the remaining eligible expenses will be paid by the insurance company. Deductibles are a common feature in various types of insurance policies, including health, auto, and property insurance, and they serve to reduce the insurance company's claim costs as well as encourage the insured to manage smaller claims independently.

The correct understanding of a deductible is important as it directly impacts how much the insurer pays for a claim and how much the insured needs to budget for potential out-of-pocket expenses. Knowing the deductible amounts is also essential for policyholders to make informed decisions about their insurance coverage and financial planning in the event of a loss.