Deductible

Definition

The amount you pay out of pocket before insurance coverage kicks in.

Real Life Example

If your home suffers $5,000 in damage and your deductible is $1,000, you pay $1,000, and your insurance covers the remaining $4,000.

Why It Matters

Choosing the right deductible can significantly affect your premium and out-of-pocket costs during a claim.

Key Takeaways

- A deductible is the amount you pay before insurance kicks in. - Higher deductibles usually mean lower premiums. - Deductibles apply per claim, not per year.

FAQs

Can I change my deductible?
Yes, but it may affect your premium and coverage.
How does a deductible impact my insurance premium?
Higher deductibles usually lower your premium.
Does every insurance claim require paying a deductible?
Yes, for most claims, unless your policy states otherwise.
Can I have different deductibles for different coverages?
Yes, some policies allow different deductibles for different types of claims.
Are there situations where a deductible doesn’t apply?
Some policies waive deductibles for certain types of losses.

Tips

Tip: Choose a deductible you can comfortably afford in case of a claim. || Tip: Consider a higher deductible to lower your monthly premium.

Pros and Cons

Pros: Lower premiums with higher deductibles. Cons: Higher out-of-pocket costs during a claim.

How It Works

1. You file a claim for $5,000 in damages. 2. You pay your $1,000 deductible. 3. Your insurer covers the remaining $4,000.

Statistics

According to a 2023 study, 60% of homeowners choose a $1,000 deductible.

External Resources

Related Terms

Premium, Coverage Limit, Claim

No related posts.