Definition of a deductible.
Insurance policies can be tricky beasts to understand, especially the whole thing about deductibles, and if you aren't entirely sure what exactly a deductible is or how the deductible on your insurance policy works we're here to help. In the world of insurance, be it health insurance or home insurance you might take out after buying a new home, a deductible is the amount the policy holder must pay in expenses out of their own pockets before the insurance company will begin to pay an expenses.
So, if you have a travel health insurance policy that you took out for your upcoming vacation and the deductible on the policy was $500 that means that before you begin to see any funds paid your way you must first pay off that $500 deductible. The main reason why insurance companies will ask clients to pay a deductible is so that it will deter people from making ridiculous claims.
You would be surprised at the amount of trivial claims insurance companies have to deal with all day long and by restricting claims to those of significance to incur large enough costs insurance companies won't be exacted to pay out as many little claims, which in turn saves them a whole lot of money over the long term. It would be like customers getting sued for a window washing company see example here taking a fall; sure their team will gladly help you, but they know there are other patients they may have to postpone seeing you because have bigger problems like broken teeth or cavities.
The higher a deductible on a policy the lower the insurance premium is so if you're willing to put up with a high deductible you won't be expected to pay as much in terms of monthly premiums. It's a trade off that you need to decide whether or not is worth it when looking into signing up for any type of insurance, be it insurance for your small business or home insurance. Deductibles are found in most policies and come in the form of clauses in your standard insurance policy. Deductibles for the most part are normally quoted in terms of fixed quantity and are part of any average policy that cover losses to the policy holder. Insurance companies are tasked with covering the claimable expenses that go above the amount of the fixed quantity, be it medical related or a possession that's damaged or stolen such as large canvas art.
Deductibles can either be paid in one of two ways: per year or per claim/covered incident and, again, this is another decision that you will have to answer yourself when signing up for any type of insurance policy. In the end, there are many types of insurance policies and many types of deductibles to choose from and that can make for a difficult decision.