Deductible

From ArticleWorld

A Deductible is the amount of a claim that the insured must pay before the insurance company will cover the rest. It is the initial portion of a covered expense that must be paid by the insured person before the insurance policy pays its part of the expense. (For example, if the deductible is $100, then the insured must pay the first $100 of the covered costs before the insurance will pay anything at all.). This amount is deducted from a claims payment. In general a higher deductible means a lower premium charged for the same coverage.

Where applied

This amount has to be paid by the policy holder for every claim or for every accident towards the total amount of an insured loss. Therefore, if the policy holder puts in a claim for repairs carried out then in most cases a deductible may need to be paid for each type of mechanical break down. If the claim is for medical expenses incurred then also a deductible needs to be paid by a medical care beneficiary before the insurance begins to pay.

In case of a car accident the policy holder has to pay a deductible with any claim that he puts in for damage or loss to the his /her own automobile even if the aforementioned loss accrues due to accidents or any acts of irresponsibility of the holder himself /herself. Claims for vandalism and theft also require a deductible to be paid. Since the injured outsider will try and collect the smallest amount of third party liability coverage, deductibles are not required to be paid for such claims.

Many travel insurance policies also have deductibles built into their claim plan.