What does a Deductible mean in an insurance policy?

What does a Deductible mean in an insurance policy?

• A. The amount of money an insured person pays before the insurance company makes payments for loss.
• B. The total amount paid by the insurer for all claims.
• C. The annual premium for the policy.
• D. The limit on how much an insurer will pay per incident.

Answer: (A)

A deductible is the portion of a loss you must cover out of pocket before your insurance starts paying. It’s the amount you pay first when a claim is filed, and the insurer pays the rest for covered losses once the deductible is met. For example, if you have a $500 deductible and a $2,000 repair, you’d pay $500 and the insurer would cover $1,500, assuming the claim is covered and within policy limits. Deductibles help share risk and often lower your premium because you’re taking on more initial cost. This concept is different from the total amount an insurer pays across all claims, the annual premium you owe to maintain the policy, or the maximum amount the insurer will pay per incident (the policy limit).

A deductible is the portion of a loss you must cover out of pocket before your insurance starts paying. It’s the amount you pay first when a claim is filed, and the insurer pays the rest for covered losses once the deductible is met. For example, if you have a $500 deductible and a $2,000 repair, you’d pay $500 and the insurer would cover $1,500, assuming the claim is covered and within policy limits. Deductibles help share risk and often lower your premium because you’re taking on more initial cost. This concept is different from the total amount an insurer pays across all claims, the annual premium you owe to maintain the policy, or the maximum amount the insurer will pay per incident (the policy limit).