What is represented by a deductible in an insurance policy?

A deductible in an insurance policy is the specific amount that the insured individual must pay out-of-pocket for covered expenses before the insurance company begins to make payments on a claim. This means that the insured is financially responsible for a portion of the costs up to the deductible amount. Once this predetermined amount has been paid toward a claim, the insurance coverage kicks in and starts to cover the subsequent eligible expenses.

This setup is often used to deter excessive claims and helps keep insurance premiums more affordable. The concept of the deductible plays a crucial role in understanding how much financial responsibility is placed on the insured individual before the insurer takes over coverage for additional expenses.