The amount of money an insured person must pay out of pocket before the insurance company begins paying on a claim. Once the insured has “met the deductible” by paying the portion of the claim he or she is responsible for, the remaining charges can be submitted to the insurance company for payment.
Deductibles usually apply to medical and auto insurance policies. They keep insurance companies from having to pay on relatively small claims that many policyholders can cover themselves, without risking rising insurance rates.
When selecting insurance policies, be sure to ask specific questions about deductibles required before policy purchase. Lower deductibles carry higher premiums and higher deductibles carry lower premiums.