Deductible
The amount the insured must pay out of pocket before the insurer pays on a covered claim, or the amount subtracted from each loss.
A deductible is the portion of a covered loss borne by the policyholder. It may apply per claim, per occurrence, or annually depending on the policy. Higher deductibles lower premium; lower deductibles increase premium.
In property claims, the insurer typically subtracts the deductible from the claim payment rather than billing separately. Wind/hail deductibles may be percentage-based in coastal areas.
Examples
A $10,000 covered loss with a $2,500 deductible yields a $7,500 payment. A 2% hurricane deductible on a $400,000 dwelling is $8,000 per storm.
Common Misconceptions
Policyholders forget separate deductibles for wind/hail or earthquake. Assuming the deductible applies only once per year when the policy is per-claim causes surprises.
Related Terms
Browse the Insurance Claims Glossary
Looking for more insurance and claims terminology? Browse the complete A-Z glossary or explore the Claims Pages Academy for licensing guides, coverage explainers, and more.
Back to Glossary Claims Pages AcademyThis definition is provided for informational and educational purposes. Insurance terminology may vary by jurisdiction, policy, and context. Consult a licensed professional for guidance specific to your situation.
