deductible
Insurance Dictionary -> deductible
Before an insurance firm can set their own coverage plan in to action, the policy holder must have already paid out a certain amount of money themselves. In the insurance industry, this amount is called the deductible. This is usually a security measure implemented by insurance companies, so that they do not have to waste their time cashing out on small claims, which bring them no real financial gain. An example of this might be a minor car accident, where the driver pays the small $300 damages out of their own pocket, because they have yet to reach their $500 insurance deductible. If however the damage was thousands of dollars, they’d have met the $500 deductible and the insurance company would pay out. Over time, if the insurance holder had several minor accidents, the amount they paid ads up until it reaches the deductible. Not every crash has to be over the $500 amount, just the total amount.
What determines the deductible amount is the amount the policy holder pays each month. So if their regular premiums were high, they might be awarded with no deductible amount at all; however if they only pay low premiums they might have a high deductible amount. It is all proportional. One has to weigh up whether they can afford to cover smaller claims themselves, compared to the amount they’d pay the insurance company for a lower deductible. A really good premium rate may obviously equal a really high deductible amount, so read the small print.
In a lot of policies, the deductible amount will reset every year, so you have to meet that amount every year.
Almost all typical vehicle insurance and medical insurance policies will come with some form of deductible, so it is important to research which companies offer the best ratio. Price comparison sites on the internet can help, but remember they will ever list all the policies out there because they work on a commission basis; so self research is also important.