deductible
The amount of money that the insured must pay out of pocket before an insurance company will pay for a claim.
A deductible acts as a financial threshold. Choosing a higher deductible usually lowers your monthly premium, but increases your immediate cost in an accident.
Word relationships
- excess: In British and Australian English, 'excess' is the exact equivalent of the American term 'deductible'.
- co-pay: A co-pay is a fixed fee paid for a specific service (like a doctor's visit), whereas a deductible is a cumulative amount that must be met before coverage begins.
- premium: The premium is the regular payment made to keep an insurance policy active, whereas the deductible is only paid when a claim is filed.
Commonly confused with
- premium: The premium is what you pay to have insurance; the deductible is what you pay when you actually use it.
Word family
- deduct (verb): To subtract or take away an amount from a total.
- deduction (noun): The action of deducting or subtracting something.
Collocations
- high deductible
- pay a deductible
- insurance deductible
- deductible amount
Example sentences
- "Since the repair bill was only $400 and my deductible was $500, I had to pay for the entire fix myself." An insurance claim after a minor accident.
- "The rental company offered an extra policy to reduce my deductible to zero in case of theft." Comparing rental insurance policies.
Memory hook
The insurance company will 'deduct' this amount from your payout, so you must pay it first. Deductible = Subtracted from their bill, added to yours.
When not to use
Do not use 'deductible' to refer to a simple discount; it specifically refers to the initial share of an insurance claim.
Fun facts
- The concept of deductibles was popularized in the early 20th century to prevent policyholders from filing tiny, expensive-to-process claims for minor scratches.
Explore more words
Preventative care, deduction, insurance, Indemnify, reimbursement
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