What is an insurance deductible?
An insurance deductible is the amount of money that an insurance policyholder is required to pay out of pocket before their insurance coverage kicks in and starts paying for covered expenses. For example, if you have a $500 deductible on your car insurance policy and you get into an accident that causes $2,000 in damage, you will be responsible for paying the first $500 of the repair costs, and your insurance company will cover the remaining $1,500.
Deductibles can vary widely depending on the type of insurance policy and the specific terms of the policy. Generally, policies with higher deductibles will have lower premiums, because the policyholder is taking on more financial risk themselves before the insurance company starts paying out. Conversely, policies with lower deductibles will have higher premiums, because the insurance company is taking on more financial risk themselves from the outset.