An insurance deductible is the amount of money that a policyholder is required to pay out of pocket before their insurance coverage kicks in and begins to cover the cost of a claim. The deductible is typically a fixed amount that is specified in the insurance policy and is chosen by the policyholder at the time the policy is purchased.

‍

For example, if a policyholder has a car insurance policy with a $500 deductible and they are involved in an accident that results in $2,000 in damages, they would be required to pay the first $500 of the repair costs out of their own pocket. After the policyholder pays the deductible, the insurance company would then cover the remaining $1,500 in repair costs, up to the limit of the policy.

‍

Deductibles are used by insurance companies as a way to reduce the number of small claims that they have to process, as well as to encourage policyholders to be more careful and responsible in their actions. Generally, policies with higher deductibles will have lower insurance premiums, while policies with lower deductibles will have higher premiums.

‍

Overall, the insurance deductible is the amount of money that a policyholder is responsible for paying out of pocket before their insurance coverage begins to take effect, and is an important factor to consider when choosing an insurance policy.