Insurance deductible

An insurance deductible is the fixed dollar amount a policyholder pays out-of-pocket before an insurer covers claim costs (for example, $500 per car accident in auto policies). Insurers calculate deductibles per claim or per policy period, as shown by annual health insurance deductibles and per-event homeowners’ insurance deductibles.

Higher deductibles usually result in lower premiums; for example, raising an auto deductible from $500 to $1,000 can cut annual premiums by 10%–20% according to The Zebra’s 2023 data. Policyholders select deductible amounts during enrollment; choices typically range from $250 to $2,000 in auto and home policies.

Many policies exclude certain services from the deductible, such as preventive care in major medical plans. Some insurers offer vanishing deductibles that decrease annually with no claims filed–like Nationwide’s “Vanishing Deductible” program which reduces the deductible by $100 each year up to $500.

Deductibles apply separately from copayments and coinsurance in health plans; for instance, patients pay the deductible first, then split additional costs with insurers via coinsurance percentages, Your Insurance Info states. Insurers count multiple claims toward separate deductibles if they occur under different coverage periods or types (e.g. two accidents in different years).

Policy documents clearly specify which incidents or coverages are subject to a deductible; flood damage may carry its own deductible within homeowners’ policies. Certain policies feature percentage-based deductibles–like hurricane deductibles set at 2%–5% of insured value in coastal states per Insurance Information Institute data.

State regulations cap minimum or maximum deductible levels for lines like health and auto insurance; California mandates no higher than a $500 collision deductible on standard personal auto policies.