Deductible

Definition

A deductible is the amount a policyholder must pay out-of-pocket before their insurance coverage begins paying for a claim. For example, with a $1,000 deductible on a $10,000 loss, the policyholder pays $1,000 and insurance covers $9,000. Deductibles can be flat amounts or percentages (common for wind/hail damage). Higher deductibles typically mean lower premiums. Some policies have separate deductibles for different types of damage (e.g., hurricane deductible).