Deductible
Definition
The amount you pay out of pocket before your insurance coverage begins to pay on a claim. Higher deductibles generally mean lower premiums. Some policies have separate deductibles for different types of losses (for example, a separate hurricane or wind/hail deductible on a homeowners policy).
When This Matters
Your homeowners policy has a $2,500 all-perils deductible. When you file a $10,000 water damage claim, you pay the first $2,500 and the insurer pays $7,500.
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