Deductible
The amount of money you pay out of your own pocket before your insurance company begins to cover costs. For example, if you have a $500 deductible and file a $2,000 claim, you pay $500 and your insurer pays the remaining $1,500.
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Example
“After paying my $1,000 deductible, the insurance company covered the rest of the repair costs for the storm damage to my roof.”
Memory Tip
Think of it as the amount you must deduct from the total before insurance kicks in.
Why It Matters
Your deductible directly affects both your monthly costs and how much you pay when you file a claim.
Common Misconception
Many people think a deductible is a one-time annual payment. Some policies apply deductibles per incident.
In Practice
If you rarely file claims, a higher deductible can save you hundreds per year in premiums.
Etymology
From Latin deductibilis, meaning that which can be taken away or subtracted.
Common Misspellings
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Related Terms
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