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