DEDUCTIBLE Meaning and
Definition
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A deductible is a specific monetary amount that an insured individual or policyholder must pay out of pocket before an insurance company will contribute towards the costs of a covered loss or claim. It represents the portion of an insurance claim that the policyholder is responsible for paying. Deductibles are commonly seen in various types of insurance, including health insurance, auto insurance, and homeowners insurance.
In the context of insurance, the deductible serves as a form of self-insurance, as the policyholder assumes a certain level of financial responsibility before the insurance coverage kicks in. The purpose of a deductible is to share the risk with the policyholder and discourage frequent or frivolous claims by making the insured party financially invested in the loss.
For instance, in auto insurance, if a policy has a deductible of $500 and the insured individual gets into an accident resulting in $2,000 of damage, they are responsible for paying the initial $500, while the insurance company covers the remaining $1,500. Therefore, the deductible acts as a threshold that the policyholder must reach before receiving reimbursement from the insurer.
Deductibles can vary depending on the insurance policy and the type of coverage. They are often chosen by the insured party when selecting a policy, with options ranging from low to high deductibles. Higher deductibles usually result in lower insurance premiums, whereas lower deductibles lead to higher premiums.
Top Common Misspellings for DEDUCTIBLE *
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Other Common Misspellings for DEDUCTIBLE
Etymology of DEDUCTIBLE
The word deductible originated from the Latin term deductibilis, which comes from the verb deducere. Deducere is composed of two Latin words: de, meaning down or away, and ducere, meaning to lead or to bring. Therefore, deductible ultimately means able to be led away or capable of being subtracted.
Similar spelling words for DEDUCTIBLE
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