What is a deductible in a property insurance policy?

What is a deductible in a property insurance policy?

• A. The up-front part of a covered loss that the insurer does not pay
• B. The maximum amount the insurer will pay for a loss
• C. The premium charged for the policy
• D. The coinsurance percentage required

Answer: (A)

A deductible is the up-front amount you must pay toward a covered loss before the insurer pays anything. It’s a specified dollar amount (or sometimes a percentage) that is subtracted from the claim payment. This design helps reduce small claims and lowers your premium, since you’re taking on more of the initial risk. On a claim, the insurer pays the remaining amount after the deductible is deducted, up to the policy limit. If the loss is smaller than the deductible, the insurer pays nothing. The premium is the cost to obtain and maintain the policy, not the amount paid toward a loss.

A deductible is the up-front amount you must pay toward a covered loss before the insurer pays anything. It’s a specified dollar amount (or sometimes a percentage) that is subtracted from the claim payment. This design helps reduce small claims and lowers your premium, since you’re taking on more of the initial risk. On a claim, the insurer pays the remaining amount after the deductible is deducted, up to the policy limit. If the loss is smaller than the deductible, the insurer pays nothing. The premium is the cost to obtain and maintain the policy, not the amount paid toward a loss.