Question

Which statement best defines the term deductible?

It is money a consumer receives after experiencing a loss.
It is the amount a consumer pays before the insurance will start paying.
It is money paid by a consumer to share the pool cost of a payout.
It is a fee paid to an insurance company to purchase coverage.

Answer 1

It is the amount a consumer pays before the insurance will start paying.

(Example: with a $500 deductible, you pay the first $500 of a covered loss; the insurer pays the rest subject to policy limits.)