What is Deductible?
The amount you pay out of pocket before your insurance coverage kicks in.
Understanding Deductible
A deductible is the fixed amount you must pay toward a covered loss before your insurance company pays the remaining amount. Higher deductibles typically result in lower monthly premiums, while lower deductibles mean higher premiums. Deductibles apply per claim or per policy period, depending on your coverage type.
Examples
- If your car is damaged and repairs cost $2,000 with a $500 deductible, you pay $500 and insurance covers $1,500.
- With a $1,000 home insurance deductible, you'd pay the first $1,000 of any covered claim.
- Health insurance deductibles reset annually, meaning you start over each year.
Common Questions About Deductible
What is a good deductible amount?
A good deductible balances affordable premiums with manageable out-of-pocket costs. Generally, choose a deductible you can comfortably pay if you need to file a claim. For auto insurance, $500-$1,000 is common. For health insurance, consider your typical medical usage and emergency fund.
Do I pay the deductible every time I file a claim?
For auto and home insurance, yes, you typically pay your deductible each time you file a claim. For health insurance, you usually pay until you meet your annual deductible, then insurance covers more of your costs for the rest of the year.
Related Insurance Types
Related Terms
Premium
The amount you pay to your insurance company for your coverage, typically monthly or annually.
Copay (Copayment)
A fixed amount you pay for a healthcare service at the time of the visit.
Coinsurance
The percentage of costs you share with your insurance company after meeting your deductible.
Out-of-Pocket Maximum
The most you'll pay for covered healthcare services in a plan year, after which insurance pays 100%.