What Is an Insurance Deductible?
An insurance deductible is the amount a policyholder must pay out of pocket on a covered claim before the insurer begins to pay. With a 1,000 deductible and a 4,000 covered repair, the policyholder pays 1,000 and the insurer pays 3,000, subject to the policy’s terms.
Choosing a Deductible
A higher deductible usually lowers the premium but increases out-of-pocket costs when a claim occurs, so it relates closely to the size of an emergency fund.
Per Claim or Per Year
Home and auto deductibles often apply per claim; health plan deductibles usually apply per year.
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Last updated: September 29, 2026. This definition is for general educational purposes only. It is not financial, investment, tax, legal, or medical advice, and it does not recommend any product or course of action. For decisions about your own situation, consult a qualified professional.