Insurance term
Deductible
A deductible is the amount you pay out of pocket on a covered claim before your insurance starts paying. For example, with a $1,000 deductible on a $5,000 loss, you pay $1,000 and the insurer covers the rest. Choosing a higher deductible usually lowers your premium, and vice versa.
Why it matters
Picking the right deductible balances a lower monthly cost against how much you could comfortably pay if a claim happens.