Insurance Deductible FAQs (Frequently Asked Questions)

What is an insurance deductible? An insurance deductible is the amount of money that you are required to pay out-of-pocket before your insurance policy kicks in and covers the remaining costs. For example, if you have a $500 deductible and your insurance covers damages up to $5,000, you will be responsible for paying the first $500 of damages, and your insurance will cover the remaining $4,500.

How does an insurance deductible work? When you file a claim with your insurance company, you will be required to pay the deductible before your insurance coverage kicks in. For example, if you have a car accident and the damages are $2,000, and your deductible is $500, you will be required to pay the first $500, and your insurance will cover the remaining $1,500.

Why do insurance policies have deductibles? Insurance policies have deductibles to reduce the risk for the insurance company and to lower the cost of premiums for policyholders. By requiring policyholders to pay a portion of the damages or losses out-of-pocket, insurance companies are able to reduce the number of small claims they have to pay, which helps keep premiums lower.

Can I choose my deductible amount? Yes, you can usually choose your deductible amount when you purchase an insurance policy. Higher deductibles typically result in lower premiums, while lower deductibles result in higher premiums. It is important to choose a deductible that you can afford to pay in the event of a claim, while also considering the overall cost of your insurance premiums.

Are there different types of deductibles? Yes, there are different types of deductibles for different types of insurance policies. For example, car insurance policies may have a per-accident deductible, while health insurance policies may have a per-incident deductible or a yearly deductible. It is important to understand the type of deductible that applies to your policy and how it works.

Do deductibles apply to all claims? Not all insurance claims have deductibles. Some policies may have exclusions or exemptions that do not require a deductible to be paid. It is important to review the terms of your policy and understand what is covered and what is not covered, as well as whether a deductible applies to a particular claim.

Can I change my deductible amount? Yes, you can usually change your deductible amount by contacting your insurance company and requesting a change to your policy. However, changing your deductible may also change your premium amount, so it is important to consider the overall cost of your insurance when making any changes.