A deductible is a specific amount of money that an individual or policyholder must pay out of their own pocket before their insurance coverage begins to pay for eligible expenses.
It is a common feature in various types of insurance, including health insurance, auto insurance, and homeowners’ insurance.
The purpose of a deductible is to share the financial responsibility between the insured person and the insurance company. Typically, the higher the deductible, the lower the insurance premium (the regular payment to maintain coverage). Deductibles help prevent small or routine claims and are primarily used for significant expenses or losses.