Deductibles :

A deductible is that portion of the amount of an insured loss, which the insured agrees to pay. It is common in almost all types of insurance policies to stipulate a definite amount of money, which is to be borne by the insured. The insurer becomes liable for any amount beyond the deductible amount stated in the contract.

It is a provision by which a specific amount is subtracted from the total loss payment and are usually found in auto, property and health insurance. Deductibles are not used in life insurance because the death of an insured is always a total loss. It is also not used in personal liability insurance because even for a small claim, the insurer must provide a legal defence.

Deductibles may be either compulsory or voluntary. Voluntary deductibles will fetch a discount in the premium. (also known as ‘excess’).