An insurance deductible is the amount taken out of an insurance check when you make certain types of claims.
You may hear the phrase that coverage begins “after you pay a deductible.” You don’t actually “pay” a deductible to the insurance company. Instead, you’re generally paying for repairs (or, in the case of health insurance, for medical care)—in the amount of the deductible—before insurance pays the rest, up to your maximum coverage amount.
Here’s a breakdown of deductible details for various types of insurance.
Auto Insurance Deductibles
When you purchased auto insurance you chose a deductible amount that will apply to collision or comprehensive insurance claims. These are claims you can make for damage to your own car, like if you backed into a pole or had a big tree branch fall on your car.
Car insurance deductible choices are in amounts such as $250, $500, $1,000 or more.
If you don’t remember what your auto insurance deductible is, check the declarations page of your policy or ask your auto insurance agent.
If you make a collision or comprehensive claim, your insurance check will be reduced by the amount of your deductible. So let’s say you backed into a pole and the bumper damage is $1,000. If you have a $250 deductible, you’ll pay $250 to the repair shop and your insurance will pay $750.
The biggest part of an auto policy is car liability insurance. Liability pays others when you’re responsible for damage or injuries. For example, if you rear-end someone else’s vehicle, they can make a claim against your liability insurance.
There’s no deductible for liability insurance. Your insurance company pays the other party and you pay nothing for the claim—except that you may get a rate increase at renewal time because of the accident.
Homeowners Insurance Deductibles
When you bought homeowners insurance you chose a deductible, such as $1,000. If you make a damage or theft claim, your insurance check is reduced by that deductible amount.
Do you actually have to pay anything out of your own pocket? Maybe not. For example, let’s say you had a chimney fire that damaged part of your living room. Let’s say the damage is $25,000 and your deductible is $1,000. You get a check for $24,000 and use it to repair the walls and floor, leaving $4,000 left to replace furniture. You could simply choose furniture that costs less than $4,000 and have money left over. You haven’t actually “paid” $1,000 to anyone.
As with auto liability insurance, there’s no deductible for homeowners liability insurance. If someone makes a claim against you—such as a slip and fall claim—the insurance company sends them a check and you pay nothing.
Health Insurance Deductibles
A health insurance deductible is what you pay toward medical care before your insurer starts paying. So if your deductible is $2,000, you’ll pay doctors’ bills up to that amount and then insurance will kick in.
Note that only expenses covered by the health plan count toward your deductible. For example, if you pay for an eyebrow lift, that’s not covered by health insurance and won’t count toward the deductible.
Your health plan may have more than one deductible. For instance, you may have a deductible amount for in-network providers and a separate deductible for out-of-network providers.
Even after you’ve met a health insurance deductible you’ll likely have additional out-of-pocket costs, such as copays and co-insurance.
Pet Insurance Deductibles
If you’re considering pet insurance, don’t focus on the monthly premium alone. There will likely be other ways the pet insurer is passing costs onto you, such as:
The pet insurance deductible, or what you have to pay for vet care before the plan starts paying
A reimbursement percentage, like 80%, which is like pet co-insurance
Here’s more on what pet insurance covers.
