Deductible
Definition:
The amount a policyholder must pay out of pocket before insurance coverage begins.
Explanation:
Deductibles can be a flat dollar amount or a percentage of the insured value, depending on the policy. Higher deductibles typically mean lower premiums, but more cost to the homeowner when a claim occurs.
Example:
If you have a $1,000 deductible and $12,000 in storm damage, the insurer pays $11,000 after you cover the first $1,000.
Why it matters:
This term affects how claims are handled and what payout a homeowner may receive.