What is the definition of Deductible?

The Deductible refers to the portion of the loss that is to be paid by the policyholder.

This comes either as a monetary amount or a period of time. The policyholder will have to pay a percentage of the benefit payment or as a specified amount. It can also be a waiting time before the insurance company will start paying the benefits.

For example, John has an auto insurance policy, with a $500 deductible. If John meets an accident and the damage amounts to $700, John would have to pay the $500 before the $200 is paid by the insurance company.

The deductible is the insurance company's way of keeping premiums affordable. It also keeps the insurance company from paying small claims for minor damages. The higher the deductible, the lower the premiums.

• Businessowners Policy / BOP
• Competitive State Fund
• Excess and Surplus Lines
• Employer’s Liability
• Blanket Insurance